Widespread recovery has swept New Zealand's regional economies during the first quarter, despite ongoing concerns for the economy.
New Zealand’s economy continued to recover solidly at the start of 2026, ahead of the economic storm triggered by the Iran War, according to Infometrics’ latest monitoring of regional economies. Provisional estimates from the Infometrics March 2026 Quarterly Economic Monitor suggests that economic activity rose 0.7 percent pa in the March 2026 quarter, and up 0.4 percent pa over the year to March 2026.
“The March 2026 quarter showed further widespread economic recovery, with 12 out of 16 regional economies expanding,” said Infometrics Principal Economist Nick Brunsdon.
“A group of high-growth regions are leading New Zealand’s recovery, growing at over one percent pa in the March 2026 quarter. This group includes the North Island powerhouses of Bay of Plenty and Waikato, and most of the South Island. Strong primary sector returns are certainly helping, though recovery has become relatively broad-based, with more industries expanding.”
“Primary sector activity remained upbeat, adding further to provincial economies,” said Brunsdon.
“Prices for dairy, meat and horticultural exports have eased back a touch, but remain elevated. Milk solid production has lifted 4.0 percent pa, boosting GDP in the regions. However, farmers are also about to bear the brunt of higher costs for fuel, fertiliser, and plastics stemming from the Iran war.“
Broader business and household confidence was also dented by soaring fuel costs towards the end of the March quarter, and expectations for an economic recovery have been pushed out, once again. Marketview card spending data shows a 0.3 percent lift in retail spending in the March 2026 quarter compared to a year earlier. Early signals suggest that higher prices for fuel are being paid for by reducing overall fuel use, and with reductions in spending on apparel and hospitality.
The labour market recovery remains more challenging, with job numbers falling 0.2 percent pa nationally in the March 2026 quarter.
Brunsdon said that South Island employment growth continues broadly unabated, in contrast to the top of the country, where Waikato was the only North Island region that didn’t face employment declines this quarter.
“Softness in construction and manufacturing continues to hold the economy back, with continued higher input costs like energy, restrained demand, and work ongoing to determine what the new normal looks like for these industries,” said Brunsdon.
“These two industries have an outsized impact on the economy, being the second and third largest industries for employment.”
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