Waikato tops North Island in economic bounce-back

Wednesday, 25 March 2026

Cows and construction are pulling Waikato out of the economic mud, with the region top in the North Island on a key economic measure.

Multiple experts spoken to by the Waikato Times said when the dairy industry was performing well, Waikato’s economy did well - and farming was experiencing its best times across sectors in years.

ASB’s latest regional economic scoreboard ranked Waikato second equal with Otago for regional performance in the last quarter of 2025 while Canterbury topped the podium for the third consecutive quarter.

The report ranks the economic performance of New Zealand’s 16 regions every three months based on 11 measures, including employment, construction, retail trade, and house prices.

ASB chief economist Nick Tuffley said the region had seen a shift in momentum, with more activity across key areas such as construction, retail spending, and car registrations.

According to the report, Waikato had benefited from its “robust” primary sector and improving labour market conditions, with employment up 2% in the region annually - the second fastest rate in the country.

Resilient global demand for the region’s key exports, including dairy, was supporting incomes and been further bolstered by a weaker New Zealand dollar.

“Income gain that has come through to dairy farmers has moved beyond just initially farmers paying down debt or building up savings to starting to get more spending occurring,” Tuffley said.

Nationally, regions with strong-performing exports were seeing strong economic performances, he said, setting them apart from other regions.

Looking ahead, this quarter was expected to be “very strong” for the region, Tuffley said.

Fonterra’s dividend payout to farmers resulting from the $4.2 billion sale of Mainland to French multi-national dairy giant Lactalis was also expected to give the region a shot in the arm via more spending and investment.

However, Tuffley said conflict in the Middle East could potentially disrupt the economic recovery.

“We've seen big lifts in the price of diesel, which may be sustained for some time, and fertilisers are getting more expensive as well - so some pretty key costs have gone up,” he said.

Dairy prices may hold up as countries looked to ensure food security which would help keep farmers’ incomes resilient, he said.

“What we don't know is just when things might calm down and energy prices and fertilisers start to ease.”

“It's probably better to be planning for a longer haul rather than some sort of short, sharp shock and then everything goes back to normal quickly.”

Waikato Chamber of Commerce chief executive Don Good said increased manufacturing, consumer confidence, and employment alongside the strength of the agricultural economy assured Waikato would continue on its growth trajectory.

“The ASB report confirms what we have been seeing and saying over the past six months; the Waikato is well situated for an agricultural-led recovery.”

The “substantial” Fonterra payout to farmers resulting would lead to “more money into the Waikato economy at a time when we sorely need it”, Good said.

“It looks as though, given the outlook for Fonterra and farmers over the next 12 months, that the Waikato can be assured that they will have an economic recovery that we deserve.”

Fonterra reported a life in the Farmgate Milk Price midpoint for the season from $9.50 per kgMS to $9.70 per kgMS.

BNZ Senior Partner for South Waikato Geoff Rawcliffe said that the farming sector was in its strongest position “for a long, long time”.

“The sector’s in a bit of a purple patch at the moment … It’s great and I think farmers deserve it because they have their fair share of tough times as well.

“Whilst farmers are in a very strong position, they are being cautious and I think that’s because historically, particularly for dairy, after really high payouts a year or two later it’s fallen off a bit of a cliff.”

He believed this year had been a good “perfect storm” for drystock and dairy farmers with high prices and an easy summer, leaving a surplus of feed, and one of the best payouts since 2007 from an inflation-adjusted perspective.

Rawcliffe said that while farmers may not be rushing out to expand, they are investing in infrastructure and reducing debt.

“People are probably focusing more on getting houses up to speed. There’s always more money to spend on houses and on-farm infrastructure.

“Not only have interest rates dropped from how high they were two years ago during peak inflation, people are paying their debt faster than probably ever before … So their balance sheets are stronger, their equity levels are stronger and cash flow is good.”

The flow-on effects are good for the wider community and Rawcliffe reckoned more sharemilkers were looking to get into first-home and farm ownership. Farm succession planning had also lifted with farmers in a position to bring in children or help support them to buy homes.

“The stronger your position in your business, the more achievable succession is. In the last couple of years, we’re achieving that in spades, so that’s really cool.”

He had also seen farm conversion to forestry slow as the best profitable use of land tipped back to farming. He believed high beef and lamb prices would stick around for at least a couple of years due to supply shortages and high demand.

He reckoned the upcoming dividend payout would be a further boon that would allow farmers to increase their resilience, to work on their environmental compliance and look for off-farm investment opportunities like shares or investment property.