Marlborough's economic potential lies in tourism and forestry
Marlborough's economy is looking "rosy" with sustained economic growth that is building confidence in the region, an economist says.
Agriculture, forestry and fishing, manufacturing, public administration and public professional services such as lawyers and accountants had all contributed to a 2.4 per cent increase in the region's gross domestic product last year.
Infometrics senior economist Benje Patterson outlined a positive economic performance during a Marlborough District Council regional planning and development meeting on Thursday.
Patterson had a sense of "deja vu" from his last council presentation six months ago, he said.
"Deja vu is usually a feeling of impending doom but it is actually a positive feeling of deja vu. Things are looking positive in Marlborough."
The past two years had seen sustained economic growth, with an average 3 per cent growth per annum in 2014 and 2015.
"This is good, we don't want flash in the pan results."
Employment was up 1.8 per cent in 2015, on the back of 3 per cent growth in 2014.
People's standard of living had improved with average annual earnings at $47,000 in 2015, up 2.7 per cent.
A pick up in construction activity meant people had more confidence to invest, Patterson said.
The housing market in Marlborough remained healthy with house prices affordable in relation to people's income.
Patterson predicted telecommuting, or working from home, would be huge in the region with more people attracted to work and live here for the lifestyle.
While the headlines were grabbed by falling dairy prices, meat, wool, seafood and forestry enjoyed good pricing, Patterson said.
Sales of these types of products were important sources of revenue for Marlborough.
But Marlborough had "dodged a bullet".
"Niwa had predicted Marlborough would be hit by an El Nino and drought. But thanks to some significant rainfall events during the summer it wasn't as badly affected."
The biggest potential for growth in Marlborough was in tourism and forestry, he said.
Visitors to New Zealand were growing fast and tourism in Marlborough had enjoyed a "golden summer".
"Tourists are staying longer which is good for second tier areas like Marlborough."
But the problem was encouraging more visitors during the slower shoulder season, Patterson said.
The increase in accommodation provider airbnb was a "silver lining" for Marlborough.
"Airbnb allows Marlborough to increase the number of beds without a lot of capital investment in facilities that for six months of the year have low occupancy."
Forestry growth was dependent on smaller forestry blocks coming on stream.
"A Ministry for Primary Industries report said we could lift harvesting by 50 per cent in Marlborough by the end of the decade if there was additional harvesting from smaller plantations. To ensure growth forestry prices need to remain at or above current levels."
In the wine industry, wine prices were flat but volumes were increasing.
The markets were absorbing the volumes and the value of wine exports were soaring, Patterson said.
"We have to be able to balance the tightrope of reasonable pricing but pushing volumes up."
For most parts of New Zealand the wine industry was seen as a "sweetener" to other big industries.
Marlborough was one of the few places in New Zealand that needed the wine sector to go well, he said.
"Wineries are benefiting from brand Marlborough. They are not going out into the market as small warriors, they are leveraging off each other with a common brand.
"It's all coming together for Marlborough at the moment.
"The dairy sector is grabbing the headlines but there is a positive message that regional New Zealand is much more diversified than we give it credit for.
"What has struck me, in Marlborough the council and business community are in touch with each other. The council is championing that without any real government push. Modest Marlborough is a bit unheralded. It is a shining light of what a community can achieve."
- The Marlborough Express