News Release

Wednesday 25 March 2015

Rotorua economy growing “at healthy rate” economic monitor reveals

Two new economic reports confirm positive progress for Rotorua’s economy in the immediate and longer term.

The reports, by two independent national economic research consultancies - Infometrics and BERL - present an increasingly promising picture of Rotorua’s economic future says Rotorua Lakes Council’s Economic Growth Portfolio lead, deputy mayor Dave Donaldson.

“We are starting to see an independent view of change which can give Rotorua some real confidence for the future,” says Mr Donaldson.

“The picture is far from complete but it does show things are moving in the right direction which is a positive change given the challenging environment we’ve endured during the last few years.”

“The reports confirm retail sales are up. International visitor spends have gone through the roof. And people are returning home from overseas in growing numbers because they see better job prospects here.

“On top of that forestry export prices are recovering and unemployment is trending down. These are strong indicators of change which I’m sure will be well received by business leaders.”

Infometrics December 2014 Quarterly Economic Monitor says Rotorua’s economy grew at a “healthy rate” throughout 2014 and is now 15 per cent larger than its post-Global Financial Crisis trough.

The report identifies 4.8 per cent growth in sales on electronic cards in the retail sector over the Christmas period, reinforcing anecdotal evidence of an upturn in retail trading patterns.

Tourism is identified as a much more significant component of Rotorua’s economy than in other parts of the country, accounting for 9.8 per cent of the district’s GDP compared to a much lower 3.8 per cent share nationally.

International visitor spend during the final quarter of 2014 was on average 26 per cent higher than the previous year, while spending by domestic visitors was up 8.3 per cent. A sharp uplift in arrivals from China, Australia, USA, Japan and Germany was a key driver of the rapid growth in international visitor spend.

Prospects for the forestry sector are also on the up, with export prices having already recovered 8.4 per cent since their September 2014 trough, while Rotorua’s domestic sales of sawn timber are expected to benefit from the country’s rising building activity.

Against a backdrop of moderate economic growth, conditions in Rotorua’s labour market have improved. Infometrics say Rotorua’s unemployment rate reduced to 7.4 per cent in 2014, down 1.3 per centage points from the 2013 average of 8.7 per cent.

Infometrics say better job prospects have reversed previous years’ net outflow of people, contributing to a positive net migration inflow to Rotorua of 433 people in 2014.

A separate report (February 2015) on population projections by economic research consultancy BERL, shows increased expectations for population growth in Rotorua over coming years.

BERL’s projections relate future population levels to the performance of the economy, with a growing economy expected to generate increased employment. They say an economy on the move will slow outward migration and unemployment will fall.

BERL has developed three alternative population projections specifically for the Rotorua district, based on work they completed for the regional Bay of Connections strategy. In all three cases, the population of Rotorua is projected to continue increasing.

The three models are a relatively conservative ‘Business-As-Usual’ scenario, a middle-of-the-road ‘Reality Check’ model, and the third more optimistic ‘Strategy Stretch’ projection.

Rotorua Lakes Council is using the middle-of-the-road ‘Reality Check’ projections for its work in developing the district’s Smart Futures spatial plan which will set out a blueprint for accommodating future growth of Rotorua district.

Under the Reality Check scenario, BERL says Rotorua is projected to enjoy a growing workforce, especially on the back of a recovery in the district’s tourism sector.

They say total employment will rise on average 1.5 per cent every year - from 28,545 in 2013 to 42,110 in 2036. This represents an increase of 13,565 extra jobs over the period.

BERL also forecasts that the expected improvement in employment levels will lead to a population increase of nearly 14,000 people, reaching 78,901 in 2036.

[ENDS]

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