Northland has come out on top in ASB's latest Regional Economic Scoreboard, helped in part by a strong forestry sector.
The scoreboard takes into account factors like employment, population growth and house prices to rank the economic performance of the country's 16 regional council areas.
Northland moved up seven places to snag the top position for the September quarter, in what the bank described as a "stunning performance".
"Rural New Zealand dominates our index, with Bay of Plenty and Waikato rounding out the top three," said senior economist Chris Tennent-Brown.
He said Northland's top spot came amid challenging conditions for the region.
"It’s an impressive performance given the region should have been more exposed than most to the reimposition of COVID Alert Level 3 in Auckland during August."
Its high ranking was attributed to solid population growth, as well as its figures for employment, retail trade and new car sales.
Forestry in the region was also described as being a "big boon".
"Forestry exports are performing strongly thanks to the rapid Chinese recovery, and the booming construction outlook domestically is also acting as a key support. Forestry products are also one of the few commodities where prices are also largely matching last year," Tennent-Brown said.
Also a factor in Northland's ranking, he noted, was the fact the index measures year-on-year improvements, which played to the region's advantage as it had had a tough 2019.
"This quarter’s result reflects an upswing, though there is still a way to go, with the unemployment rate above the national average. Still, it's positive to see some catch-up momentum getting underway."
According to the report, the country's main centres had a softer quarter, but "rural New Zealand is holding up well", largely due to its heavy agricultural focus.
"The primary sector's resilience is really pleasing to see. Most obviously, food production is an essential service, so farmers have just kept doing a great job while their peers in the service sector dealt with the fear of further lockdowns," said Tennent-Brown.
"With borders largely closed to the movement of people, tourism is hurting, and that’s having a negative flow-on effect on related sectors, like retail trade. So it’s not surprising to see regions that are more reliant on agriculture and exports experiencing the benefits."
Regions in the North Island outperformed those in the South, with Otago, Southland and Canterbury all remaining at the bottom of the ladder for the quarter, the report showed.
"South Island regions have traditionally relied more heavily on international tourist earnings than most North Island regions, and we're seeing this continue to take a toll.
"It's highly likely that until we get a vaccine and tourism begins to pick up, we will continue to see the relative industry impacts reflected in regional economic success."