South Island Leads Economic Recovery as North Island Struggles

New Zealand's economic downturn has been ongoing for three years, with some regions performing better than others. According to Kiwibank's latest Regional Score update, Otago and Canterbury are leading the way in terms of strong economic performance, while Wellington and Gisborne are struggling.

Chief economist Jarrod Kerr attributed the disparity to factors such as tourism and agriculture driving growth in the South Island, whereas higher unemployment and weak business conditions are weighing on many parts of the North Island. He noted that the economy is improving but at different speeds across the country.

Kerr emphasized that this downturn has been a long one, with two consecutive recessions recorded in 2024 and 2025. He also pointed out that the housing market has not recovered since the post-Covid surge, with house prices remaining stagnant in Auckland and Wellington.

The labor market is also telling a story of inequality, with North Island unemployment running at around 6 percent compared to 3.7 percent in the South Island. Underutilization is particularly high in Northland, at 13.8 percent.