A boost in government spending looks likely to push the capital to win the economic race between the regions.

Westpac’s Regional Roundup report forecasted Wellington to become the economic powerhouse within the next year, with improvements in Northland, Auckland, Canterbury and Otago also expected.

“New Zealand’s economic slowdown over the past couple of years has been due to domestic demand – the slowing Canterbury rebuild, slower house price inflation, low business confidence and slowing population growth,” said Westpac regional economist Paul Clark.

“Auckland and Canterbury, which make up half of the country’s population, were disproportionately impacted.”

Increased government spending had bolstered Wellington recently, keeping unemployment low, he said.

Clark said spending from the provincial growth fund had helped boost regions such as Northland and Gisborne, but the government’s decision to ban oil and gas exploration would keep Taranaki in neutral gear.

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