Nelson region grows GDP but some sectors still struggle

A busy construction sector in Tasman is contributing to the district's 6.2% gross domestic product growth for the year to March.


A busy construction sector in Tasman is contributing to the district’s 6.2% gross domestic product growth for the year to March.

Tasman is leading the Nelson region’s recovery from the impact of the Covid-19 pandemic, with a busy construction sector contributing to one of the strongest economic growth rates in the country.

Infometrics Quarterly Economic Monitor estimates preliminary gross domestic product (GDP) growth for the Nelson region for the year to March of $5.8 billion, in line with the national average of 5.2%. However, Tasman district’s GDP grew 6.2% from March last year, while Nelson city’s growth was slower at 4.3%.

Tasman, along with Hawke’s Bay and Gisborne, had the strongest economic growth in the country compared to pre-pandemic levels.

The figures have prompted a warning from the Nelson Regional Development Agency that while the region’s GDP surge is good news and the region is generally doing well, the hospitality and some retail sectors are still struggling.

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The agency said the 5.2% increase in GDP in the Nelson region pushed its overall performance above pre-Covid levels. It attributed Tasman’s higher rate to the continued high level of construction in Richmond – despite soaring material prices – and the home working of Tasman residents who stay closer to home.

Nelson, meanwhile, had been suffering from the “Omicron effect” with a lack of foot traffic – both visitors and commuting locals – which had impacted the hospitality and retail sectors, the agency said.

This was compounded by the disparity in consumer spending, with Tasman up 7.1% in the Monitor, while Nelson posted just 3.6% growth, well below the national average of 6.1%.

“These figures have to be offset by record inflation of 6.9% in the year to March, combined with very high fuel costs,” the agency said.

Persistently high inflation and the lowest level of consumer confidence on record indicated that further increases in consumer spending would be dampened, it said.

Consumer spending in Nelson-Tasman combined was $392 million for the March quarter for that three-month period, compared to $394 million for the March quarter of 2021.

“Rate hikes are expected to ease inflationary pressures somewhat, but persistent staff shortages across the board, rising costs and ongoing supply chain issues mean real growth will be difficult for some time.”

Visitor spending is another example, the agency said, with Tasmans up 6.9% in the year to March while Nelson was up just 1.4%. This was compared to the previous quarter when the year to December showed summer and Christmas spending, Tasman’s spending rose 13.4% while Nelson was up 7.2%.


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“We have to remember these increases are in comparison to last year’s severely affected by Covid and these numbers show Tasman is recovering much faster than Nelson.”

Traffic flows in Nelson fell 0.8% year-to-date through March, while in Tasman they rose 1.3%, closer to the national figure of 1.8%. The agency said this was mainly due to the high incidence of homework in Nelson’s office employment and increased traffic from much construction activity in Richmond with the comings and goings of tradespeople, along with population growth in Tasman, where health insurance had risen 3.1% compared to Nelson’s 0.7% increase.

Among other indicators in the monitor, tourism spending in Nelson-Tasman rose 4.5% to US$279 million for the year ended March. However, Tasman’s rose 6.9%, while Nelson’s rose 1.4% – compared to the national rise of 7.1%.

Consumer spending in Tasman rose 7.1% for the year to March, according to Infometrics' quarterly economic monitor, while Nelson saw growth of 3.6%.


Consumer spending in Tasman rose 7.1% for the year to March, according to Infometrics’ quarterly economic monitor, while Nelson saw growth of 3.6%.

The 240 housing permits issued in the region for the year to March were up from 171 the year before and above the 10-year average of 164. But Tasmania’s permit boom had continued, the agency said and according to the Monitor District approvals fell 8.7%.

By comparison, Nelson had a 39.6 percent increase in housing approvals, but that number was on very low baselines — 82 approvals were granted in the year to March, compared with 46 the year before — and it was likely that this was mainly due to A single major was attributable to development, the agency said.

The housing completions are also still affected by the shortage of materials, it said.

In the year to March, US$118.5 million in non-residential building permits were issued in Nelson-Tasman, a 17.9% increase from the previous year. Out-of-home consent increased by 22.6% in Tasman District and 10.2% in Nelson, with the national average increasing by 13.6%.

Chris McKeen/Stuff

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