Orange's gross domestic product has fallen by 1.1 per cent in the past financial year - and the drought has been blamed.
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A new report, Economic Performance of Australia's cities and regions 2018-19, has found the drought has hit much of regional NSW.
Orange's GDP (the economic output per person) is now $4238, the research by SGS Economics and Planning found.
While it was down on last year the report said Orange's five-yearly growth was still positive at 1.3 per cent.
"Drought conditions impacted Wagga Wagga and Orange," it said.
Orange was one of only four NSW regional cities highlighted in the report.
Drought conditions impacted Wagga Wagga and Orange.
- SGS Economics and Planning report
Newcastle was shown to have 0.9 per cent growth ($15,281 GDP), Wollongong up 0.7 per cent ($7438) and Wagga Wagga down 2.5 per cent ($5809).
"The recent drought is impacting many rural economies," it said.
"Falling agricultural production is directly affecting related industries such as manufacturing, wholesale trade and transport and storage."
It found the contributing factors to growth across regional NSW included health care, education, public administration, administrative services and construction.
However agriculture, transport, manufacturing and retail were negative.
NSW Labor finance spokesman Walt Secord said the research also highlighted a growing economic gap between Sydney and regional NSW.
Mr Secord said the report showed Sydney's GDP was $86,500 while in regional NSW it was $55,200, a difference of $31,300, which he said was a record.
"There is considerable concern about the impact of the drought on regional communities," he said.
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