Manawatū's economy is resilient, showing steady growth despite current challenges, with promising improvements expected in 2025 as inflation eases and interest rates drop.
GDP growth is expected to stay low, with the Reserve Bank predicting a small decline of -0.4%. While interest rates from major banks are starting to decrease due to a better OCR, it will take time for people to feel relief from the impact of higher interest rates on their spending. This is partly because global growth is slow, fewer people are migrating to the country, and the government is spending less, which all contribute to keeping demand low. However, things look positive for 2025, with GDP growth expected to rise to 3.3%.
The value of non-residential consents in Manawatū have dropped by 49.9%, more than the national decline of 9.6%, due to completed major projects and high interest rates. This decrease, driven by high borrowing costs and weak demand, reflects short-term challenges for businesses. However, strategic investments and anticipated benefits from lower interest rates and higher disposable incomes are expected to boost profitability by 2025.
It is an ideal time for businesses that can invest in their futures to do so, with ample supply in the construction sector and weak cost pressures. Small and medium-sized enterprises (SMEs) are feeling the brunt of short-term demand and interest rate pressures. However, as confidence grows, we can expect to see a rise in construction investment both regionally and nationally." Says Stacey Andrews, Palmerston North City Council Economist.
The region’s workforce is also holding steady, with employment up by 1% for the year to June 2024, slightly below the national growth rate of 2.1%. However, employment levels are a major concern, with some businesses responding to lower demand by reducing their workforce. We anticipate that unemployment will continue to rise until economic demand recovers.
“Although we’re still facing some economic challenges in 2024, the outlook is starting to look brighter. Our region’s strong economic foundations are helping us to stay resilient, and with inflation coming down and interest rates expected to drop throughout the rest of the year and into 2025 we can see better times ahead." Notes Jerry Shearman, CEDA's Tumuaki - Chief Executive.
Manawatū Quarterly Economic Dashboard June Quarter 2024
If you’re short for time, check out the data at a glance. The latest Manawatū Quarterly Economic Dashboard for the June 2024 Quarter is now live, giving you a quick overview of the latest data and insights for our region, against a national context.
