A new survey shows the drought has taken a major toll on business confidence.
A state of drought has been declared for the North Island, and the Buller and Grey Districts of the West Coast of the South Island.
The BNZ confidence survey released on Monday says optimism about where the economy will be in a year has dropped to its lowest point in six months.
The bank's chief economist, Tony Alexander, says at the beginning of March, 41% of those surveyed were optimistic about the future of the economy.
That figure has now dropped to 25% - the lowest it has been since October 2012.
Mr Alexander says the 27,000 people surveyed submitted written responses and most farmers put their pessimism down to the lack of rain.
Federated Farmers' adverse events spokesperson Katie Milne says she is not surprised by the results, seeing as the drought could end up costing the economy $2 billion.
Small businesses in rural towns are also hard-hit because farmers are spending less, she says.
"Every rural town in New Zealand has a big influence from what income comes on board from the farming community, because that's basically what they're servicing.
"All those small businesses are going to have an unfortunate side-effect from this as well with lack of cash."
Retailers surveyed noted poor sales of winter stock and tourism operators said the high New Zealand dollar was hitting them.
