The latest Hunter Valley Research Foundation economic indicators released during a breakfast at Newcastle Panthers yesterday revealed a combination of good policy, smart business decisions and fortune had positioned the region well to ride out the economic meltdown.

Senior research fellow Simon Deeming said buoyant consumer confidence and improvement in the housing sector were symptoms of the Hunter's extraordinary performance.

But Mr Deeming warned that a strong Australian dollar, rising interest rates and an uncertain transition from public stimulus to private sector growth would temper improving market conditions forecast for the coming year.

Mr Deeming said industries that had relied on stimulus spending would experience a short-term slump after stimulus package spending was gradually reduced.

"The fragile recovery in some regional industries, notably dwelling and commercial construction, and export-oriented manufacturing and tourism, may be challenged by the rapid turnaround in interest rates," he said.

"Some continue to look for forward orders beyond the current round of public stimulus, while others, notably mining, will fare better.

"We're not home free yet."

Indicators revealed recovery in the housing sector would be gradual after three consecutive rate rises last year hit housing sentiment, in turn slowing the region's economic upturn.

Commonwealth Bank economist James McIntyre provided a global economic overview at the breakfast, forecasting a 1.25 per cent interest rate increase by the end of the year.

"The Reserve Bank has 10 more meetings this year so it is fair to estimate they will increase rates every second meeting," Mr McIntyre said.