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Economy of New Zealand

The economy of New Zealand is a highly developed free-market economy.[25] It is the 52nd-largest national economy in the world when measured by nominal gross domestic product (GDP) and the 62nd-largest in the world when measured by purchasing power parity (PPP). New Zealand has a large GDP for its population of 5 million, and sources of revenue are spread throughout the large island nation. The country has one of the most globalised economies and depends greatly on international trade, mainly with Australia, China, the European Union, Japan, Singapore, South Korea,[not verified in body] and the United States. New Zealand's 1983 Closer Economic Relations agreement with Australia means that the economy aligns closely with that of Australia.

Economy of New Zealand
CurrencyNew Zealand dollar (NZD, NZ$)
1 July – 30 June[1]
Trade organisations
APEC, CPTPP, WTO and OECD
Country group
Statistics
Population5,223,100 (June 2023 estimate)[4]
GDP
  • US$252 billion (nominal, 2023)[5]
  • US$279 billion (PPP, 2023)[5]
GDP rank
GDP growth
  • 2.4% (2022)[6]
  • 1.1% (2023f)[6]
  • 0.8% (2024f)[6]
GDP per capita
GDP per capita rank
GDP by sector
  • Primary industries: 7.6%
  • Manufacturing: 12.2%
  • Services: 71%
  • (2011)[7]
7.3% (June 2022)[8]
Population below poverty line
11.0% (relative, 2014)[9]
33.9 medium (2019)[10]
Labour force
  • 2.820 million (Q2 2022)[13]
  • 68.5% employment rate (Q2 2022)[13]
  • 70.8% labour force participation rate (Q2 2022)[13]
Labour force by occupation
Unemployment
  • 3.3% (Q2 2022)[13]
  • 96 thousand (Q2 2022)[13]
Average gross salary
NZ$5,882 / $3,455.82 monthly[15] (2022)
NZ$4,698 / $2,758.99 monthly[16][17] (2022)
Main industries
Food processing, Agriculture, Forestry, Wool, Tourism, Financial Services
1st (very easy, 2020)[18]
External
Exports$72.8 billion (FY 2022/23)[19]
Export goods
Dairy products, meat, logs and wood products, fruit, wine, machinery and equipment, fish and seafood
Main export partners
Imports$88.8 billion (FY 2022/23)[19]
Import goods
Petroleum, vehicles, machinery and equipment, electronics, textiles, plastics
Main import partners
FDI stock
  • $84.19 billion (31 December 2017 est.)[14]
  • Abroad: $16.74 billion (31 December 2016 est.)[14]
−$5.471 billion (2017 est.)[14]
NZ$156.181 billion (53% of GDP) (December 2018)[20] NZ$86.342 billion (30.5% of GDP) (Feb 2018)[21]
Public finances
31.7% of GDP (2017 est.)[14]
+1.6% (of GDP) (2017 est.)[14]
Revenues74.11 billion (2017 est.)[14]
Expenses70.97 billion (2017 est.)[14]
Economic aidAs donor: $99.7 million (FY99/00)
$10.02 billion (June 2023 est.)[24]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

New Zealand's diverse economy has a sizable service sector, accounting for 63% of all GDP activity as of 2013.[26] Large-scale manufacturing industries include aluminium production, food processing, metal fabrication, wood and paper products. Mining, manufacturing, electricity, gas, water, and waste services accounted for 16.5% of GDP as of 2013.[26] The primary sector continues to dominate New Zealand's exports, despite accounting for only 6.5% of GDP as of 2013.[26] The information technology sector is growing rapidly.[27]

The major capital market is the New Zealand Exchange (NZX). As of February 2023, NZX had a total of 338 listed securities, equity, debt and funds with a combined market capitalisation of NZD $226 billion.[28] New Zealand's currency, the New Zealand dollar (informally known as the "Kiwi dollar"), also circulates in four Pacific Island territories. The New Zealand dollar is the 10th-most traded currency in the world.[29]

History edit

 
Agriculture (especially dairy farming – such as for the Fonterra plant shown) is a major export earner
 
An aerial view of the Kinleith Mill. Forestry exports are an important component of New Zealand's economy.

For many years New Zealand's economy was built on a narrow range of agricultural products, such as wool, meat and dairy. These products became New Zealand's staple and most valuable exports, underpinning the success of the economy, from the 1850s until the 1970s.[30] For example, from 1920 to the late 1930s, the dairy export quota was usually around 35% of New Zealand's total exports, and in some years made up almost 45%.[31] Due to the high demand for these primary products, manifested by the New Zealand wool boom of 1951, New Zealand had one of the highest standards of living in the world for 70 years.[32]

In the 1960s, prices for these traditional exports declined, and in 1973 New Zealand lost its preferential trading position with the United Kingdom when the latter joined the European Economic Community. Partly as a result, from 1970 to 1990, the relative New Zealand GDP per capita adjusted for purchasing power declined from about 115% of the OECD average to 80%.[33]

Between 1984 and 1993, New Zealand changed from a somewhat closed and centrally controlled economy to one of the most open economies in the OECD.[34] In a process often referred to in New Zealand as Rogernomics, successive governments introduced policies which dramatically liberalised the economy.

In 2005, the World Bank praised New Zealand as the most business-friendly country in the world.[35][36] The economy diversified and by 2008, tourism had become the single biggest generator of foreign exchange.[37]

Early years edit

Prior to European settlement and colonisation of New Zealand, Māori had a subsistence economy, the basic economic unit of which was the sub-tribe or hapū.[38] From the 1790s, the waters around New Zealand were visited by British, French and American whaling, sealing and trading ships. Their crews traded European goods, including guns and metal tools, for Māori food, water, wood, flax and sex.[39] Their increasing lawlessness and plans for formal settlement by the New Zealand Company were two of the drivers behind the signing of the Treaty of Waitangi in 1840, which established New Zealand as a colony. Settlers continued to be dependent on Māori for food until the 1860s.[38][39] From then immigrants became self-sufficient in farming, and started quarrying a variety of minerals including gold, which was discovered at Gabriel's Gully in Central Otago, leading to the Otago Gold Rush in 1861. Settlements flourished in areas where these quarries were established. In the 1880s, Dunedin became the richest city in the country largely on the back of investments from the gold rush.[40]

Sheep farming began in the Wairarapa but soon spread up and down the east coast from Southland to the East Cape once rudimentary roads and transport became available. Much of the land used for farming was taken or leased from Māori. Sheep numbers grew quickly and by the mid-1850s, there were already a million sheep in New Zealand; by the early 1870s, there were 10 million.[30] Wool became the first staple export, initially exported from the Wellington settlement in the late 1850s, although unrefrigerated meat and dairy products were exported as far as Australia.[30]

In the 1870s, Julius Vogel was periodically both colonial treasurer and premier. He viewed New Zealand as a "Britain of the South Seas"[41] and began the development of infrastructure in New Zealand investing heavily in roads, railways, telegraphs and bridges funded by public borrowing.[42] Progress slowed after the collapse of the City of Glasgow Bank in 1878 which led to a contraction in credit from London, the centre of the world's financial system at the time. Economic activity was depressed for some years afterwards, until refrigeration was introduced in 1882.[32] This enabled New Zealand to start exporting meat and other frozen products to the United Kingdom. Refrigeration transformed and shaped the development of the economy but, in the process, established New Zealand's economic dependence on Britain.

The success of refrigeration was directly related to the growth and development of farming in the country. In the 19th century, the bulk of economic activity was in the South Island of New Zealand. From around 1900, dairy farming became increasingly viable in areas which were less suitable for sheep, particularly in Northland, the Waikato and Taranaki. As dairying developed, the North Island slowly became more important to the economy.[43] Britain led on to be the sole market for meat and animal products in New Zealand, owing to the increase in its land cultivation and farming. The dairy farming can therefore be seen as a response to the powerful market demands in Europe, transforming not only New Zealand's countryside, economy and production techniques, but also causing migration in order to create the needed supply of dairy farming.[44]

20th century edit

The Reserve Bank of New Zealand was established as New Zealand's central bank on 1 August 1934. Up until that time New Zealand's monetary policy had been set in the United Kingdom, and the New Zealand Pound was issued by private banks. A separate central bank gave New Zealand's government control of monetary policy for the first time,[45] although New Zealand remained part of the sterling area by pegging its pound to the British pound sterling until the introduction of the New Zealand dollar in 1967, after which the dollar was instead pegged to the United States dollar.[46]

By the mid-20th century, pastoral-farming products made up more than 90% of New Zealand's exports,[43] 65% of which was going to Britain in the 1950s. Having a secure market with guaranteed prices also enabled New Zealand to impose high tariffs on imported goods from other countries. Tough import controls gave local manufacturers the ability to produce similar products locally, broaden the base of jobs available in New Zealand and still compete against higher priced imports.

This prosperity continued up to 1955 at which point Britain stopped giving New Zealand guaranteed prices for its exports.[47] From then on, what New Zealand received was dictated by the free market. As a result, during the 1950s and 1960s the country's standard of living began to slip as the export sector was no longer able to pay for the level of imported goods required to meet the country's growing consumerism.

 
Tiwai Point Aluminium Smelter, opened in 1971

Britain applied to join the European Economic Community (EEC) in 1961, but was vetoed by the French. The government of Keith Holyoake reacted by attempting to diversify New Zealand's export markets, signing the first free trade agreement (Australia New Zealand Free Trade Agreement) in 1965,[48] and opening new diplomatic posts in Hong Kong, Jakarta, Saigon, Los Angeles and San Francisco.[31] Britain applied again to join the EEC in 1967, and entered into negotiations for membership in 1970. Holyoake's deputy and successor, Jack Marshall, (briefly Prime Minister in 1972) negotiated continued access for New Zealand exports to the United Kingdom under the so-called "Luxembourg Agreement".[49]

Britain gained full membership of the EEC on 1 January 1973, and all trade agreements with New Zealand came to an end, except the Luxembourg Agreement.[49] By the end of that year, only 26.8% of New Zealand's exports were to Britain.[50] This had a significant effect on the standard of living. In 1953, New Zealand had the third highest standard in the world. By 1978, it had dropped to 22nd place.[47]

Having lost unrestricted access to its traditional market, New Zealand continued to search for alternative export markets and diversify its economy. The Government of Norman Kirk, who succeeded Marshall, put greater emphasis on expanding New Zealand's trade, especially with South East Asia. Following the Yom Kippur War in October 1973, an oil embargo was put in place by the Middle Eastern oil exporters, leading to the 1973 oil crisis. This compounded New Zealand's dire economic situation further. Inflation greatly increased as the cost of transport and imported goods soared, causing standards of living to decline.[51]

Think Big edit

Following the 1979 energy crisis resulting from the Iranian Revolution of that year, Robert Muldoon, the prime minister between 1975 and 1984, instituted an economic strategy known as Think Big. Large scale industrial plants were established based on New Zealand's abundant natural gas. A new range of products for export such as ammonia, urea fertilizer, methanol and petrol were produced and with greater use of electricity (with the electrification of the North Island Main Trunk railway) with the goal that this would reduce New Zealand's dependence on oil imports.[37]

Other projects included the Clyde Dam on the Clutha River, which was built to meet a growing demand for electricity, and the expansion of the New Zealand Steel plant at Glenbrook.[52]

The Tiwai Point Aluminium Smelter, which opened in 1971, was also upgraded as part of the Think Big strategy and now brings in approximately NZ$1 billion in exports every year.[53]

Unfortunately for New Zealand, most of these projects only came on line at the same time as oil prices dropped during the 1980s oil glut. The price of crude went from more than US$90 a barrel in 1980, to about US$30 a few years later. Because these Think Big projects required massive borrowing to get started, public debt soared from $4.2 billion in 1975 when Muldoon became prime minister to $21.9 billion when he left office nine years later. Inflation remained rampant, averaging 11% in the 1980s.[51] Once Labour came to power in 1984, many of these projects were sold to private industry as part of a wider sale of state-assets.[52]

The Muldoon Government did make some moves towards deregulation however. For example, in 1982 it removed the transport licensing restrictions on road carriers carting goods more than 150 km, and turned the Railways Department into a statutory corporation.

Rogernomics edit

Between 1984 and 1993, New Zealand underwent radical economic reform, moving from what had probably been the most protected, regulated and state-dominated system of any capitalist democracy to an extreme position at the open, competitive, free-market end of the spectrum.[54]

The Fourth Labour government, elected in July 1984, moved away from government intervention in the economy and allowed free market mechanisms to dominate. These reforms became known as "Rogernomics", named after minister of finance from 1984 to 1988, Roger Douglas. The changes included making the Reserve Bank independent of political decisions; performance contracts for senior civil servants; public sector finance reform based on accrual accounting; tax neutrality; subsidy-free agriculture; and industry-neutral competition regulation. Government subsidies including agricultural subsidies were eliminated; import regulations were loosened up; the exchange rate was floated; and controls on interest rates, wages, and prices were removed; and personal rates of taxation were reduced. Tight monetary policy and major efforts to reduce the government budget deficit brought the inflation rate down from an annual rate of more than 18% in 1987. The deregulation of government-owned enterprises in the 1980s and 1990s reduced government's role in the economy and permitted the retirement of some public debt.

 
 

The new Government was faced with an exchange rate crisis the day after it was elected. Speculators expected the change of government to result in a 20% devaluation of the New Zealand dollar, which led to the 1984 New Zealand constitutional crisis due to Muldoon's refusal to devalue, worsening the currency crisis further. As a result, the dollar was floated on 4 March 1985, allowing for the value of the dollar to change with the market.[55] Prior to the dollar being floated, the dollar was pegged against a basket of currencies.[55]

Financial markets were deregulated and tariffs on imported goods lowered and phased out. At the same time subsidies to many industries, notably agriculture, were removed or significantly reduced. Income and company taxes were reduced and the top marginal tax rate was reduced from 66% to 33%. These were replaced by a comprehensive tax on goods and services (GST) initially set at 10%, then increased to 12.5% and recently increased to 15% in 2011. A surtax on universal superannuation was also introduced.[39] Many government departments were corporatised, and from 1 April 1987 became State owned enterprises, required to make a profit. The new corporations shed thousands of jobs adding to unemployment; Electricity Corporation 3,000; Coal Corporation 4,000; Forestry Corporation 5,000; New Zealand Post 8,000.[56]

The wage and price freeze of the early eighties coupled with the removal of financial restrictions and a lack of investment opportunities, led to a speculative bubble on New Zealand's sharemarket, sharemarket crash of 1987, in which New Zealand's sharemarket shed 60% from its 1987 peak, and taking several years to recover.[57][58]

 
New Zealand money supply and inflation
  M3 money supply increases
  Housing inflation

Inflation continued to be a major problem afflicting the New Zealand economy. Between 1985 and 1992, inflation averaged 9% per year and the economy was in recession.[59] The unemployment rate rose from 3.6% to 11%,[60] New Zealand's credit rating dropped twice, and foreign debt quadrupled.[59] In 1989 the Reserve Bank Act 1989 was passed, creating strict monetary policy under the sole control of the Reserve Bank Governor. From then on the Reserve Bank focused on keeping inflation low and stable, using the Official Cash Rate (OCR) – the price of borrowing money in New Zealand – as its primary means to do so. As a result, inflation rates fell to an average of 2.5% in the 1990s, compared to 12% in the 1970s.[51] However, the tightening of monetary policy contributed to rising unemployment in the early 1990s.[61]

The Labour Party was greatly divided over Rogernomics, especially following the 1987 sharemarket crash and its effect on the economy, which slumped along with the rest of the world into recession in the early 1990s. The National Party was returned to power at the 1990 general election and Ruth Richardson became minister of finance under Prime Minister Jim Bolger. The new Government was again thrown a major economic challenge, with the then state-owned Bank of New Zealand needing a bail-out to stay operational.

Richardson's first budget in 1991, nicknamed the 'Mother of all Budgets',[62] attempted to address constant fiscal deficits and borrowing by cutting state spending. Unemployment and social welfare benefits were cut and 'market rents' were introduced for state houses – in some cases tripling the rents of low-income people.[63] Richardson also introduced user-pays requirements in hospitals and schools.[62] These reforms became known derisively as Ruthanasia.

By this time, New Zealand's economy faced serious social problems; the number of New Zealanders estimated to be living in poverty grew by at least 35% between 1989 and 1992;[59] many of the promised economic benefits of the experiment never materialised.[64] Gross domestic product per capita stagnated between 1986–87 and 1993–94, and by March 1992 unemployment rose to 11.1%[65] Between 1985 and 1992, New Zealand's economy grew by 4.7% during the same period in which the average OECD nation grew by 28.2%.[66] From 1984 to 1993 inflation averaged 9% per year, New Zealand's credit rating dropped twice, and foreign debt quadrupled.[59] Between 1986 and 1993, the unemployment rate rose from 3.6% to 11%.[67]

 
Since the deregulation of the postal sector, different postal operators can install mail collection boxes in New Zealand's streets

Deregulation also created a business-friendly regulatory framework which has benefited those able to take advantage of it. A 2008 survey in The Heritage Foundation and The Wall Street Journal ranked New Zealand 99.9% in "Business freedom", and 80% overall in "Economic freedom", noting that it takes, on average, only 12 days to establish a business in New Zealand, compared with a worldwide average of 43 days.[68]

Deregulation has also been blamed for other significant negative effects. One of these was the leaky homes crisis, whereby the loosening up of building standards (in the expectation that market forces would assure quality) led to many thousands of severely deficient buildings, mostly residential homes and apartments, being constructed over a period of a decade. The costs of fixing the damage has been estimated at over NZ$11 billion (as at 2009).[69]

21st century edit

Unemployment continued to fall from 1993 to 1994 fiscal year, until the onset of the 1997 Asian financial crisis again pushed the rate higher.[70] By 2016 the unemployment rate decreased to 5.3 percent, the lowest level in 7 years.[71]

Between 2000 and 2007, the New Zealand economy expanded by an average of 3.5% a year driven primarily by private consumption and the buoyant housing market. During this period, inflation averaged only 2.6% a year, within the Reserve Bank's target range of 1% to 3%.[72] However, in early 2008 the economy entered recession, before the effects of the global financial crisis (GFC) set in later that year. A drought over the 2007/08 summer led to lower production of dairy products in the first half of 2008. Domestic activity slowed sharply over 2008 as high fuel and food prices dampened domestic consumption, while high interest rates and falling house prices drove a rapid decline in residential investment.[72]

Around the world instability was developing in the finance sector. This reached a peak in September 2008 when Lehman Brothers, a major American bank, collapsed propelling the world into the global financial crisis.[73]

Finance company collapses (2006–2012) edit

 
New Zealand bonds
Inverted yield curve in 1994–1998 and 2004–2008
  20 year
  10 year
  2 year
  3 month
  1 month

Uncertainty began to dominate the global financial and economic environment. Business and consumer confidence in New Zealand plummeted as dozens of finance companies collapsed.[74] To try and stop a flight of funds from New Zealand institutions to those in Australia, the Government established the Crown Retail Deposit Guarantee Scheme to cover depositors funds in the event that a bank or finance company went broke.[75] This protected some investors but nevertheless, at least 67 finance companies collapsed within a short period of time.[76] The largest of these was South Canterbury Finance which cost taxpayers NZ$1.58 billion when the company collapsed in August 2010.[77] The directors of many of these finance companies were subsequently investigated for fraud and some high-profile directors went to prison.[78][79][80][81][82]

In an attempt to stimulate the economy, the Reserve Bank lowered the Official Cash Rate (OCR) from a high of 8.25% (July 2008) to an all-time low of 2.5% at the end of April 2009.[72]

Fortunately for New Zealand, the recession was relatively shallow compared to many other nations in the OECD, it was sixth least affected out of the 34 member nations with negative real GDP growth totaling 3.5%.[72] In 2009 the economy picked up, led by strong demand from major trading partners Australia and China, and historically high prices for New Zealand's dairy and log exports. In 2010 the GDP grew by a modest 1.6%, but over the next couple of years economic activity continued to improve, driven by the rebuild in Canterbury after the Christchurch earthquakes and recovery in domestic demand.[72] Through 2011, global conditions deteriorated and the terms of trade eased off their 2011 peak, continuing to moderate until September 2012. Since then, commodity prices have rebounded strongly, with strong demand from China and the international situation improving. Commodity prices have been at record highs in recent quarters and remain elevated. High commodity prices are expected to provide a considerable boost to nominal GDP growth in the near term.[72]

"Rock star" economy edit

In 2013, the economy grew 3.3%. HSBC chief economist for Australia and New Zealand, Paul Bloxham, was so impressed that he predicted New Zealand's growth would outpace most of its peers, and he described New Zealand as the "rock star economy of 2014".[83] Another financial commentator said the New Zealand dollar was the "hottest" currency of 2014.[84] Only three months later, the New Zealand Productivity Commission expressed concern about low living standards and problems affecting the long-term drivers of growth. Paul Conway, Director of Economics and Research at the Productivity Commission, wrote: "New Zealand's broad policy settings should generate GDP per capita 20 per cent above the OECD average, but the actual result is more than 20 per cent below average. We may be punching above our weight, but that's only because we are in the wrong weight division!"[85] In August, Bloxham admitted that "the sharp decline in dairy prices over the last six months has clouded the outlook somewhat".[86] In December however Bloxham stated that he thought the New Zealand economy would continue to grow strongly.[87]

In 2014 increased attention was paid to the growing gap between rich and poor. In The Guardian, Max Rashbrook said policies implemented by both Labour and National governments have increased inequality. He claims that for twenty years outrage "has been muted", but "Alarm bells are finally beginning to sound. Recent polling shows three-quarters of New Zealanders think theirs is no longer an egalitarian country".[88]

2020–22 recession edit

New Zealand recorded its first case of COVID-19 on 28 February 2020. In response to the pandemic, the country closed its borders to everyone except New Zealand citizens and residents on 19 March, and went into full (Level 4) lockdown from 26 March to 27 April, followed by a partial (Level 3) lockdown from 28 April to 13 May.

The border closure combined with the lockdowns saw the retail, accommodation, hospitality, and transport sectors experiencing major declines. On 17 September 2020, New Zealand officially entered a recession, with the country's gross domestic product retracting by 12.2% in the June quarter.[89][90][91] The GDP rebounded 14% in the September quarter to leave a 2.2% year-on-year retraction.[92]

After successfully containing the virus, the New Zealand economy had sharp growth in what is known as a V-shaped recovery and ended the year with an overall economic expansion of 0.4%, better than the predicted 1.7% contraction.[93] Unemployment also dropped to 4.9% in December 2020, down from a peak Covid effected rate of 5.3% in September.[94]

By 23 September 2021, the Restaurant Association's Chief executive Marisa Bidois estimated that about 1,000 hospitality businesses nationwide had been forced to close as a result of the COVID-19 pandemic, leading to the loss of 13,000 jobs. In response, the Association lobbied the Government for Government for continued wage subsidies and incentives to boost customer rates.[95] On 13 November 2021, the Bay of Plenty Times reported that 26,774 companies had been liquidated during the first eight months of 2021.[96]

On 27 January 2022, New Zealand's inflation rate hit a 30-year record high of 5.9% at the end of 2021. According to figures released by Statistics New Zealand, the rising cost of construction, petrol and rents pushed the consumer price index up 1.4 per cent between October and December 2021. Statistics NZ also recorded a two percent increase in household utilities expenses, which was fuelled by the rising costs of new dwellings (which rose by 16% from 2020) and a 30 percent hike in fuel prices (from NZ $1.87 per litre to $2.45 per litre). Prime Minister Jacinda Ardern attributed the sharp inflation rate to rising crude oil prices overseas. By contrast, the opposition National Party leader Christopher Luxon and Finance spokesperson Simon Bridges attributed rising inflation to the Government's alleged "wasteful" spending.[97]

On 1 February 2022, an annual report released by the Organisation of Economic Cooperation and Development (OECD) identified the country's border restrictions and declining house prices as the main risks facing New Zealand's economy that year. While the OECD report credited New Zealand's elimination strategy and macroeconomic stimuli such as wage and socio-economic subsidies with helping the economy to bounce back to pre-COVID-19 levels, it also warned that excessive Government spending was causing the economy to overheat and substantial increases in household and government debt. The OECD welcomed the Reserve Bank's decision to raise interest rates but also urged the Government to raise the superannuation age, eliminate obstacles to building houses, and reduce government spending. The OECD also supported the introduction of a social insurance scheme for unemployed workers.[98]

Overview edit

 
New Zealand balance of payments and international investment position - net international debt 2000 to 2022

In 2015 the Social Progress Index, which covers such areas as basic human needs, foundations of well-being, and the level of opportunity available to citizens, ranked the New Zealand economy fifth.[99] However, the outlook includes some challenges. New Zealand income levels, which used to be above those of many countries in Western Europe prior to the crisis of the 1970s, dropped in relative terms and never recovered. As a result, the number of New Zealanders living in poverty has grown and income inequality has increased dramatically.

New Zealand has also had persistent current-account deficits since the early 1970s, peaking at −7.8% of GDP in 2006 but falling to −2.6% of GDP in FY 2014.[100] The CIA World Fact Book estimates New Zealand's 2017 public debt (that owed by the government) at 31.7% of GDP.[101] Between 1984 and 2006, net external foreign debt increased 11-fold, to NZ$182 billion.[35] As of   2018 gross core crown debt was NZ$84,524 million or 29.5% of GDP and net core crown debt was NZ$62,114 million or 21.7% of GDP.[21]

 
New Zealand Government Gross Debt as percent of GDP 1860 to 2000
 
GDP per capita development in Australia and New Zealand

Despite New Zealand's persistent current-account deficits, the balance on external goods and services has generally been positive. In FY 2014, export receipts exceeded imports by NZ$3.9 billion.[100] There has been an investment income imbalance or net outflow for debt-servicing of external loans. In FY 2014, New Zealand's investment income from the rest of the world was NZ$7 billion, versus outgoings of NZ$16.3 billion, a deficit of NZ$9.3 billion.[100] The proportion of the current-account deficit that is attributable to the investment income imbalance (a net outflow to the Australian-owned banking sector) grew from one third in 1997 to roughly 70% in 2008.[102]

Taxation edit

At the national level the Inland Revenue Department (IRD) collects tax in New Zealand on behalf of the New Zealand Government. New Zealanders pay national taxes on personal and business income, and on the supply of goods and services (GST). There is no capital-gains tax, although certain "gains" such as profits on the sale of patent rights are deemed to be income. Income tax does apply to property transactions in certain circumstances, particularly speculation. Local authorities manage and collect local property taxes (rates). Some goods and services carry a specific tax, referred to as an excise or a duty such as alcohol excise or gaming duty. These are collected by a range of government agencies such as the New Zealand Customs Service. There is no social security (payroll) tax or land tax in New Zealand.

The 2010 New Zealand budget announced cuts to personal tax-rates, with the top personal tax-rate reduced from 38% to 33%[103] The cuts gave New Zealand the second-lowest personal tax burden in the OECD. Only Mexico's citizens retained a higher percentage-wise "take home" proportion of their salaries.[104]

The cuts in income tax were estimated to reduce revenue by $2.46 billion.[105] To compensate, the National government raised GST from 12.5% to 15%.[106] Treasury figures show that top income-earners in New Zealand pay between 6% and 8% of their income on GST. Those at the bottom end, earning less than $356 a week, spend between 11% and 14% on GST. Based on these figures, The New Zealand Herald predicted that putting GST up to 15% would increase living costs for the poor more than twice as much as for the rich.[107]

Corruption edit

New Zealand ranked 1st on the Transparency International Corruption Perceptions Index (CPI) of 2017 with a score of 89 out of 100.[108] In 2018 New Zealand ranked 2nd on the Corruption Perceptions Index with a score of 87 out of 100.[109] In 2019, New Zealand ranked 1st on the Corruption Perceptions Index with a score of 87 out of 100.[110] Although New Zealand is one of the least corrupt countries in the world, corruption still exists in New Zealand.[111]

Regional economies edit

 
Map of regions of New Zealand

In March 2023, Statistics New Zealand published details of the break-down of gross domestic product in the regions of New Zealand for the year ended March 2022:[112]

Region (map reference) GDP, 2021 (NZ$ million) Share of national GDP GDP per capita, 2021 (NZ$) GDP growth, 2020-21
Northland (1) 9,321 2.6% 46,611   +11%
Auckland (2) 136,493 37.8% 80,328   +10.3%
Waikato (3) 32,558 9.0% 63,713   +11.1%
Bay of Plenty (4) 21,666 6.0% 62,673   +11.4%
Gisborne (5) 2,690 0.7% 51,833   +9.4%
Hawke's Bay (6) 10,708 3.0% 58,769   +11.3%
Taranaki (7) 9,599 2.7% 75,643   +15.3%
Manawatū-Whanganui (8) 14,328 4.0% 55,665   +8.2%
Wellington (9) 44,987 12.5% 82,772   +9.5%
North Island 282,355 78.1% 72,068   +10.4%
Tasman / Nelson (10 / 11)[* 1] 6,614 1.8% 58,580   +9.8%
Marlborough (12) 3,466 1.0% 67,045   +1.7%
West Coast (13) 2,101 0.6% 64,063   +8.7%
Canterbury (14)[* 2] 44,032 12.2% 67,400   +9.7%
Otago (15) 15,336 4.2% 62,518   +10.2%
Southland (16) 7,396 2.0% 72,223   +10.5%
South Island 78,945 21.9% 65,875   +9.4%
New Zealand 361,299 100.0% 70,617   +10.2%
  1. ^ Nelson and Tasman are combined by Statistics New Zealand, but are separate regions.
  2. ^ Includes the Chatham Islands.

Unemployment edit

Prior to the economic shock created by Britain's decision to join the EEC in 1973, which removed the UK as New Zealand's primary market for exports,[113] unemployment in New Zealand was very low. A recession and a collapse in wool prices in 1966 led to unemployment rising by 131%, but still represented only a 0.7% percentage point increase in the unemployment rate.[114]

After 1973, unemployment became a persistent economic and social issue in New Zealand. Recessions from 1976 to 1978 and from 1982 to 1983 greatly increased unemployment again.[114] Between 1985 and 2012 the unemployment rate averaged 6.29%. After the stock market crash of 1987, unemployment rose 170%[114] reaching an all-time high of 11.20% in September 1991.[115] The Asian financial crisis of 1997 sent unemployment upwards again, by 28%.[114] By 2007 it had dropped again and the rate stood at 3.5% (December 2007), its lowest level since the current method of surveying began in 1986. This gave the country the 5th-best ranking in the OECD (with an OECD average at the time of 5.5%). The low numbers correlated with a robust economy and a large backlog of job positions at all levels.[116] Unemployment numbers are not always directly comparable between OECD nations, as members do not all keep labour market statistics in the same way.

The percentage of the population employed has also increased in recent years, to 68.8% of all inhabitants,[when?] with full-time jobs increasing slightly, and part-time occupations decreasing in turn. The increase in the working population percentage is attributed[by whom?] to increasing wages and higher costs of living moving more people into employment.[116][failed verification] The low unemployment also had some disadvantages, with many companies unable to fill jobs.

From December 2007, mainly as a result of the global financial crisis, unemployment numbers began to rise. This trend continued until September 2012, reaching a high of 6.7%. They began to recover after that point, sitting at 3.9% as of June  2019.[117]

Housing affordability edit

Shamubeel Eaqub, formerly a principal economist at the New Zealand Institute of Economic Research (NZIER), said in 2014 that thirty years prior, an average house in New Zealand cost two or three times the average household income. House prices rose dramatically in the first years of the 21st century and by 2007, an average house cost more than six times household income.[118] International surveys in 2013 showed that housing was unaffordable in all eight of New Zealand's major markets – "unaffordable" being defined as house prices which are more than three times the median regional income.[119]

Demand for property has been strongest in Auckland. In 2014 the average sales price there went from $619,136 to $696,047, a rise of 12% in that 12-month period alone.[120] In 2015, prices rose another 14%.[121] This made Auckland New Zealand's least affordable market and one of the most expensive cities in the world[122] with houses costing 8 times the average income.[119] Between 2012 and April 2016, the average Auckland home increased in price by just over two-thirds reaching $931,000 – higher than the cost of an average home in Sydney.[123]

As a result, more people are being priced out of the property market. Those on low incomes are hardest hit, affecting many Maori and Pasifika. New Zealand's relatively high mortgage-rates are exacerbating the problem[124] making it difficult for young people with steady jobs to buy their first home.[125] According to a 2012 submission made to the Housing Affordability Inquiry,[126] escalating house prices are also impacting on many middle income groups, especially those with large families.[127] Mortgage adviser Bruce Patten said the trend was "disturbing" and added to the gap between the "haves and have-nots".[128]

Property-analysis company CoreLogic said[when?] that 45% of house purchases in New Zealand are now made by investors who already own a home, while another 28% are made by people moving from one property to another. Approximately 8% of purchases go to overseas-based cash buyers[118] – primarily Australians, Chinese, and British – although most[quantify] economists believe that foreign investment is currently[when?] too small to have a significant effect on property prices.[129]

Whether purchases are made by New Zealanders or by foreigners, it is generally those who are already well off who are buying the bulk of properties on the market. This has had a dramatic effect on home-ownership rates by Kiwis, now[when?] at its lowest level since 1951. Even as recently as 1991, 76% of New Zealand homes were occupied by their owners. By 2013, this had reduced to 63%,[130] indicating that more and more people are having to rent.[citation needed] Raewyn Cox, chief executive of the Federation of Family Budgeting, says: "High prices and high interest rates (have) sentenced a rising number of New Zealanders to be lifetime tenants" where they are "stuck in expensive rental situations, heading towards retirement."[124]

Inequality edit

 
An egalitarian New Zealand was briefly realised in the interwar and post-war periods, when successive governments sponsored a massive state housing programme

Between 1982 and 2011 New Zealand's gross domestic product grew by 35%. Almost half of that increase went to a small group who were already the richest in the country. During this period, the average income of the top 10% of earners in New Zealand (those earning more than $72,000)[131] almost doubled going from $56,300 to $100,200. The average income of the poorest tenth increased by 13% from $9700 to $11,000.[132]

Statistics New Zealand, which keeps track of income disparity using the P80/20 ratio, confirms the increase in income inequality. The ratio shows the difference between high household incomes (those in the 80th percentile) and low household incomes (those in the 20th percentile). The inequality ratio increased between 1988 and 2004, and decreased until the onset of the Global Financial Crisis in 2008, increasing again to 2011 and then declining again from then. By 2013 the disposable income of high-income households was more than two-and-a-half times larger than that of low-income households.[133] Highlighting the disparity, the top 1% of the population now[when?] owns 16% of the country's wealth[citation needed] – the richest at one point 5% owned 38%[134] – while half the population, including beneficiaries and pensioners, earn less than $24,000.[131]

Superannuation edit

New Zealand has a universal superannuation scheme. Only people who are aged 65 years old or over, is a New Zealand citizen or permanent resident and who is residing in New Zealand at the time of application is eligible. They must also have lived in New Zealand for at least 10 years since they turned 20 with five of those years being since they turned 50. Time spent overseas in certain countries and for certain reasons may be counted for New Zealand superannuation. New Zealand superannuation is taxed, the rate of which depends on superannuitants' other income. The amount of superannuation paid depends on the person's household situation. For a married couple the net tax amount is set by legislation to be no less than 66% of net average wage.[135]

Because of the growing number of elderly becoming eligible, superannuation costs rose from $7.3 billion a year in 2008 to $10.2 billion in 2014.[136] In 2011 there were twice as many children in New Zealand as elderly (65 and over); by 2051 there are projected to be 60% more elderly than children. In the ten years from 2014, the number of New Zealanders over the age of 65 was projected to grow by about 200,000.[137]

This poses a significant problem for superannuation. The government gradually increased the age of eligibility from 61 to 65 between 1993 and 2001.[138] In that year the Labour Government of Helen Clark introduced the New Zealand Superannuation Fund (known as the "Cullen Fund" after Minister of Finance Michael Cullen) to part-fund the superannuation scheme into the future. As at October 2014, the fund managed NZ$27.11 billion, 15.9% of which it invested within New Zealand.[139]

In 2007 the same Government introduced a new individual saving-scheme, known as KiwiSaver. KiwiSaver principally targets growing people's retirement savings, but younger participants can also use it to save a deposit for their first home. The scheme is voluntary, work-based and managed by private-sector companies called "KiwiSaver providers". As of   2014 KiwiSaver had 2.3 million active members (60.9% of New Zealand's population under 65). NZ$4 billion was contributed annually, and a total of NZ$19.1 billion has been contributed since 2007.[140]

Consumption edit

New Zealanders see themselves as first-world consumers with first-world tastes and habits - mitigated only slightly by the country's remoteness from main global producers.

Infrastructure edit

According to the National Infrastructure Unit of the Treasury, New Zealand "...continues to face challenges to its infrastructure; all forms of infrastructure are long-term investments, and change does not come about easily or quickly."[141] A report prepared for the Association of Consulting and Engineering New Zealand in 2020 claimed that there was an infrastructure deficit of $75  billion (about one quarter of GDP), following decades of under-investment that began in the 1980s.[142]

Transport edit

 
Highways, rail lines and an inter-island ferry in central Wellington

New Zealand's transport infrastructure is "generally well developed."[143]

Road network edit

The New Zealand state highway network consists of 11,000 km of road, with 5981.3 km in the North Island and 4924.4 km in the South Island, built and maintained by the NZ Transport Agency, and paid for from general taxation and fuel excise duty. Heavy road users must pay Road User Charges as well, there is limited use of tolling on state highways. There is also 83,000 km of local roads built and maintained by local authorities.[144]

Railway network edit

The railway network is owned by state-owned enterprise KiwiRail and consists of 3,898 km of railway line, built to the narrow gauge of 1,067 mm (3 ft 6 in).[143] Of this, 506 km is electrified.[145]

Airways edit

There are seven international airports and twenty-eight domestic airports.[143] Air New Zealand, 52% government-owned,[146] is the national carrier and a state owned enterprise. Airways New Zealand, another state owned enterprise, provides air traffic control and communications.

Seaports edit

New Zealand has 14 international seaports.[143]

Telecommunications edit

 
Telephone booths in Dunedin

Present-day telecommunications in New Zealand include telephony, radio, television, and internet usage. A competitive telecommunications market has seen mobile prices drop to some of the lowest in the OECD.[147] The copper wire and fibre cable networks are mostly owned by Chorus Limited, a publicly listed company. Chorus wholesales services to retail providers (such as Spark). In the mobile sector, there are three operators: Spark, One NZ and 2degrees.

Internet edit

New Zealand has a high rate of internet use. As of October 2014, there are 1,916,000 broadband connections and 65,000 dial-up connections in New Zealand, of which 1,595,000 are residential and 386,000 are business or government.[148] The majority of connections are digital subscriber line over phone lines.

The Government has two plans to bring Ultra-Fast Broadband to 97.8% of the population by 2019, and is spending NZ$1.35 billion on public-private partnerships to roll out fibre-to-the-home connection in all main towns and cities with population over 10,000. The program aims to deliver ultra-fast broadband capable of at least 100 Mbit/s download and 50Mbit/s upload to 75% of New Zealanders by 2019.[149] In total, 1,340,000 households in 26 towns and cities will be connected.

Gigabit internet (1000Mbit/s download speeds) was made available to the entire Ultra-Fast Broadband (UFB) footprint on 1 October 2016, in an announcement from Chorus.[150]

A$300 million Rural Broadband Initiative (RBI) has also been introduced by the Government, with the aim to bring broadband of at least 5Mbit/s to 86% of rural customers by 2016.[151]

Energy edit

From 1995 to 2013, the energy intensity of the economy per unit of GDP declined by 25 percent.[152] A contributing factor is the growth of relatively less energy-intensive service industries.[153] New Zealand will be potentially among the main winners after the global transition to renewable energy is completed; the country is placed very high – no. 5 among 156 countries – in the index of geopolitical gains and losses after energy transition (GeGaLo Index).[154]

Electricity edit

The electricity market is regulated by the Electricity Industry Participation Code administered by the Electricity Authority (EA).[155] The electricity sector uses mainly renewable energy sources such as hydropower, geothermal power and increasingly wind energy.

The 83% share of renewable energy sources[156] makes New Zealand one of the most sustainable economies in terms of energy generation.[157] New Zealand suffers from a geographical imbalance between electricity production and consumption. The most substantial electricity generation (both existing and as remaining potential) is located on the South Island and to a lesser degree in the central North Island, while the main demand (which is continuing to grow) is in the northern North Island, particularly the Auckland Region. This requires electricity to be transmitted north through a power grid which is reaching its capacity more often.

Water edit

As of 2021, almost all of the three waters assets (drinking water, stormwater and wastewater) are owned by local councils and territorial authorities. There are currently 67 different asset-owning organisations in total.[158]

The challenges for local government include funding infrastructure deficits and preparing for large re-investments that are estimated to require $110 billion over the next 30 to 40 years.[159] There are also significant challenges in meeting statutory requirements for the safety of drinking water, and the environmental expectations for management of stormwater and wastewater. Climate change adaptation, and providing for population growth add to these challenges.

A nationwide reform programme is underway, with the intention of amalgamating the three waters assets into a small number of large regional publicly owned utilities.[158]

Trade edit

New Zealand's small size and long distances from major world markets creates significant challenges in its ability to compete in global markets. In 2018, New Zealand's main trading partners were China, Australia, the European Union, the United States and Japan. Together, these five partners account for 66% of New Zealand's two-way trade.[160][161] In March 2014, the total value of goods exported from New Zealand topped $50 billion for the first time, up from $30 billion in 2001.[162] New Zealand Trade and Enterprise (NZTE) offers strategic advice and support to New Zealand businesses wanting to export goods and services to other countries.

Trade agreements edit

 
  New Zealand
  Free trade agreements in force
  Free trade agreements concluded but not in force

Since 1960s New Zealand has pursued free trade agreements with many countries to diversify its export markets and increase the competitiveness of New Zealand's exports to the world.[163] As well as reducing barriers to trade, Trade Agreements New Zealand has entered into are designed to ensure existing access is maintained. Trade agreements establish rules by which trade can take place and ensure regulators and officials in countries New Zealand is trading with work closely together.[163]

China edit

China is New Zealand's largest trading partner, buying primarily meat, dairy products and pine logs. In 2013, trade between New Zealand and China was worth NZ$16.8 billion.[161] This has occurred primarily because of soaring demand for imported dairy products, following the Chinese milk scandal in 2008. Since then demand for milk products has been so strong that in the 12 months to March 2014, there was a 51% increase in total exports to China.[164] The increase was facilitated by the New Zealand–China Free Trade Agreement which came into force on 1 October 2008. Since that year exports to China have more than tripled.[165]

Australia edit

 
Australia New Zealand Closer Economic Relations Trade Agreement 28 March 1983 – signed by Laurie Francis & Lionel Brown

Australia was New Zealand's largest bilateral trading partner in 2013, when trade between the two countries was worth NZ$25.6 billion,[161] and before China overtook Australia. Economic and trading links between Australia and New Zealand are underpinned by the "Closer Economic Relations" (CER) agreement, which allows for free trade in goods and most services. Since 1990, CER has created a single market of more than 25 million people. Australia is now the destination of 19% of New Zealand's exports, including light crude oil, gold, wine, cheese and timber, as well as a wide range of manufactured items.

The CER also creates a free labour market which allows New Zealand and Australian citizens to live and work freely in each other's country together with mutual recognition of professional qualifications. This means individuals who are registered to practise an occupation in one country can register to practise an equivalent occupation in the other country. Banking regulation and supervision are co-ordinated through the Trans-Tasman Council on Banking Supervision and there are also ongoing discussions about co-ordinating Australian and New Zealand business law.[166]

European Union edit

The European Union is New Zealand's third largest trading partner. A growing number of New Zealand companies use the United Kingdom as a base to supply their products to the European market.[167] However trade with the European Union is declining as demand from Asia continues to grow. The EU takes only 8% of New Zealand exports but provides around 12% of imports.[166]

In July 2014, negotiations on the Partnership Agreement on Relations and Cooperation (PARC) between New Zealand and the European Union were concluded.[168] The agreement covers the trade and economic relationship between the EU and New Zealand with a view to further liberalisation of trade and investment and acknowledges the intention of the European Union to upgrade its diplomatic presence in New Zealand with a resident ambassador.[169]

United States edit

The United States was New Zealand's third largest trading partner in 2013, when bilateral trade between the two countries was valued at NZ$11.8 billion,[161] and before it was overtaken by the EU. New Zealand's main exports to the United States are beef, dairy products and lamb. Imports from the US include specialised machinery, pharmaceutical products, oil and fuel. In addition to trade, there is a high level of corporate and individual investment between the two countries and the US is a major source of tourists coming to New Zealand. In March 2012, the United States had a total of $44 billion invested in New Zealand.[170] A number of US companies have subsidiary branches in New Zealand. Many operate through local agents, with some joint venture associations. The United States Chamber of Commerce is active in New Zealand, with a main office in Auckland and a branch committee in Wellington.

According to the Ministry of Foreign Affairs, New Zealand and the United States "share a deep and longstanding friendship based on a common heritage, shared values and interests, and a commitment to promoting a free, democratic, secure and prosperous world".[171] This common background has not translated into a free trade agreement between the two countries.[172]

Japan and other Asian economies edit

Japan is New Zealand's fifth largest trading partner. In the 21st century, Asian economies have been developing rapidly providing significant demand for New Zealand's exports. New Zealand also trades with Taiwan, Hong Kong, Malaysia, Indonesia, Singapore, Thailand, India and the Philippines and this now accounts for around 16% of total exports.[166] New Zealand initiated a free trade agreement with Singapore in September 2000 which was extended in 2005 to include Chile and Brunei and is now known as the P4 agreement.

Relationship with Pacific Islands edit

The Pacific region with numerous islands is New Zealand's sixth largest trading market and is growing every year. In 2011 exports to Pacific Islands were worth over $1.5 billion up 12% on the previous year. Fiji is the biggest individual market followed very closely by Papua New Guinea, French Polynesia and New Caledonia. Goods exported to the islands include refined oil, construction materials, medicines, sheep meat, milk, butter, fruit and vegetables.[173] New Zealand also assists Pacific Islands with defence and regional security, and with management of the environment and fisheries.

Because of their small size, the Pacific Islands are some of the most vulnerable environments in the world and are on the receiving end of numerous cyclones every year. When disasters occur, they often have severe social and economic effects which last for years. Since 1992, New Zealand has co-operated with Australia and France to respond to disasters in the Pacific. New Zealand provides emergency supplies and transport, funding for roading and housing and the deployment of specialists to affected areas.[174]

Through the Ministry of Foreign Affairs and Trade, New Zealand also provides international aid and development funding to help stimulate sustainable economic development in underdeveloped economies. The New Zealand Aid Programme, allocated about $550m a year, is focused primarily on promoting development in the Pacific. The allocation of $550 million represents about 0.26% of New Zealand's gross national income (GNI).[175]

Foreign investment edit

New Zealand welcomes and encourages foreign investment, which is overseen by the Overseas Investment Office. In 2014 foreign direct investment totalled NZ$107.69 billion.[21] Between 1989 and 2013, foreign investment increased from NZ$9.7 billion to NZ$101.4 billion - a change of over 1,000%.[176] Between 1989 and 2007, foreign ownership of the New Zealand sharemarket went from 19% to 41% but has since dropped back to 33%.[citation needed]

In 2007, around 7% of all agriculturally productive land in New Zealand was foreign-owned.[35] In 2011, economist Bill Rosenberg claimed that the figure was closer to 9% when including foreign ownership of forestry land.[177] In March 2013, the financial sector, which includes the "big-four" Australian-owned banks, was worth NZ$39.3 billion - the largest share of the NZ$101.4 billion of foreign ownership of New Zealand companies at the time.[176]

Impact edit

Between 1997 and 2007, foreign investors made NZ$50.3 billion profit, 68% of which went overseas. The Campaign Against Foreign Control of Aotearoa (CAFCA) says this has a negative impact on the economy, arguing that when foreign investors buy up New Zealand companies, they tend to cut staff and push down wages.[35] It is also argued that growing foreign ownership has done nothing to reduce New Zealand's foreign debt. In 1984, private and public foreign debt was NZ$16 billion (NZ$50 billion in March 2013 dollars), which was less than half New Zealand's GDP at the time. By March 2013, total foreign debt stood at NZ$251 billion, well over 100% of New Zealand's GDP.[176]

Data edit

 
Tourism, like here on the Milford Sound (special bus with viewing gallery), is a major export earner for New Zealand

The following table shows the main economic indicators in 1980–2020 (with IMF staff estimates in 2021–2026). Inflation below 2% is in green.[178]

Year GDP (bil. US$ PPP) GDP per capita (US$ PPP) GDP (bil. US$ nominal) GDP per capita (US$ nominal) GDP growth (real) Inflation rate (%) Unemployment (%) Government debt in GDP (%)
1980 28.5 9,177.3 22.5 7,246.9  1.0%  17.1% 4.0% n/a
1981  32.2  10,288.8  23.4  7,503.1  3.0%  15.5%  3.9% n/a
1982  35.1  11,151.9  23.2  7,370.6  2.9%  16.1%  4.4% n/a
1983  36.4  11,464.6  22.5  7,064.3  −0.1%  7.4%  6.2% n/a
1984  40.4  12,566.6  22.4  6,960.7  6.9%  6.1%  7.2% n/a
1985  42.1  12,995.1  22.5  6,943.5  1.2%  15.4%  3.9% 64.2%
1986  43.8  13,375.0  27.4  8,373.5  1.8%  13.2%  4.2%  68.6%
1987  45.9  13,915.8  36.9  11,189.5  2.4%  15.8%  4.2%  63.0%
1988  47.8  14,354.0  45.5  13,643.7  0.6%  6.4%  5.8%  54.8%
1989  49.9  14,826.9  44.1  13,100.0  0.4%  5.7%  7.3%  55.0%
1990  51.8  15,204.8  45.8  13,439.7  0.0%  6.1%  8.0%  55.5%
1991  52.8  15,112.2  43.4  12,426.1  −1.3%  2.6%  10.6%  58.0%
1992  54.4  15,400.8  41.5  11,754.9  0.7%  1.0%  10.7%  58.7%
1993  58.6  16,401.6  44.8  12,536.1  5.2%  1.3%  9.8%  54.6%
1994  63.2  17,452.6  52.9  14,607.5  5.6%  1.7%  8.4%  48.9%
1995  67.7  18,415.1  62.3  16,938.0  4.9%  3.8%  6.5%  43.5%
1996  71.7  19,211.8  69.1  18,504.2  4.1%  2.3%  6.3%  37.3%
1997  74.8  19,765.5  68.9  18,214.2  2.5%  1.2%  6.9%  34.6%
1998  75.8  19,874.7  56.8  14,885.5  0.3%  1.3%  7.7%  34.5%
1999  80.4  20,955.3  58.9  15,340.1  4.6%  −0.1%  7.1%  32.0%
2000  85.7  22,209.2  54.2  14,028.1  4.3%  2.6%  6.2%  30.0%
2001  89.9  23,132.6  53.1  13,667.8  2.6%  2.6%  5.5%  28.2%
2002  95.6  24,200.8  62.0  15,701.9  4.7%  2.7%  5.3%  26.4%
2003  101.7  25,237.7  82.5  20,480.4  4.2%  1.8%  4.8%  24.7%
2004  109.4  26,745.0  101.6  24,840.2  4.8%  2.3%  4.0%  22.5%
2005  116.3  28,129.3  113.2  27,378.7  3.2%  3.0%  3.8%  20.8%
2006  123.4  29,493.7  109.7  26,221.9  2.9%  3.4%  3.9%  18.4%
2007  131.1  31,031.6  134.9  31,909.4  3.4%  2.4%  3.6%  16.3%
2008  133.4  31,303.9  135.4  31,759.2  −0.2%  4.0%  4.0%  19.0%
2009  132.7  30,815.5  121.8  28,283.7  −1.2%  2.1%  5.9%  24.3%
2010  136.6  31,383.4  145.3  33,379.6  1.8%  2.3%  6.2%  29.7%
2011  142.0  32,377.2  167.0  38,063.0  1.8%  4.0%  6.1%  34.7%
2012  144.4  32,733.6  175.0  39,683.4  2.5%  1.1%  6.5%  35.7%
2013  157.8  35,474.6  187.2  42,089.5  2.3%  1.1%  5.8%  34.6%
2014  167.2  36,993.7  200.1  44,282.1  3.7%  1.2%  5.4%  34.2%
2015  170.5  36,971.5  176.2  38,200.0  3.6%  0.3%  5.4%  34.2%
2016  185.2  39,266.3  186.0  39,426.7  3.9%  0.6%  5.2%  33.4%
2017  197.3  40,976.0  203.8  42,334.7  3.5%  1.9%  4.8%  31.1%
2018  208.9  42,617.4  210.0  42,839.8  3.4%  1.6%  4.3%  28.0%
2019  217.8  43,686.0  210.4  42,210.2  2.4%  1.6%  4.2%  32.0%
2020  215.9  42,445.5  209.4  41,164.6  −2.1%  1.7%  4.6%  43.6%
2021  235.0  45,879.6  247.6  48,349.0  5.1%  3.0%  4.3%  52.0%
2022  249.5  48,202.1  267.6  51,706.9  3.3%  2.2%  4.4%  56.9%
2023  259.7  49,462.1  282.4  53,795.6  1.7%  2.0%  4.7%  58.5%
2024  270.6  50,787.4  294.5  55,273.0  1.9%  2.0%  4.9%  59.0%
2025  282.7  52,263.7  306.9  56,739.2  2.2%  2.0%  4.4%  57.8%
2026  295.5  53,833.7  320.0  58,293.3  2.4%  2.0%  4.5%  55.3%
Industrial production growth rate
5.9% (2004) / 1.5% (2007)
Household income or consumption by percentage share
  • Lowest 10%: 0.3% (1991)
  • Highest 10%: 29.8% (1991)
Agriculture – products
Wheat, barley, potatoes, pulses, fruits, vegetables; wool, beef, dairy products; fish
Exports – commodities
Dairy products, meat, wood and wood products, fish, machinery
Imports – commodities
Machinery and equipment, vehicles and aircraft, petroleum, electronics, textiles, plastics
Electricity
  • Consumption: 34.88 TWh (2001) / 37.39 TWh (2006)
  • Production: 38.39 TWh (2004) / 42.06 TWh (2006)
  • Exports: 0 kWh (2006)
  • Imports: 0 kWh (2006)
Electricity – production by source[156][179]
  • Hydro: 60% (2020)
  • Geothermal: 17% (2020)
  • Wind: 5% (2020)
  • Fossil fuel: 17% (2020)
  • Nuclear: 0% (2020)
  • Other: 3.4% (2010)
Oil
  • Production: 42,160 barrels (6,703 m3) 2001 / 25,880 barrels (4,115 m3) 2006
  • Consumption: 132,700 barrels (21,100 m3) 2001 / 156,000 barrels (24,800 m3) 2006
  • Exports: 30,220 barrels (4,805 m3) 2001 / 15,720 barrels (2,499 m3) 2004
  • Imports: 119,700 barrels (19,030 m3) 2001 / 140,900 barrels (22,400 m3) 2004
  • Proven reserves: 89.62 million barrels (14,248,000 m3) January 2002
Exchange rates
New Zealand dollars (NZ$) per US$1 – 1.4771 (2016), 1.2652 (2012), 1.3869 (2005), 1.5248 (2004), 1.9071 (2003), 2.1622 (2002), 2.3788 (2001), 2.2012 (2000), 1.8886 (1999), 1.8632 (1998), 1.5083 (1997), 1.4543 (1996), 1.5235 (1995)

See also edit

References edit

  1. ^ "Year End Financial Statements". NZ Treasury. Retrieved 5 March 2017.
  2. ^ "World Economic Outlook Database, April 2019". IMF.org. International Monetary Fund. Retrieved 29 September 2019.
  3. ^ "World Bank Country and Lending Groups". datahelpdesk.worldbank.org. World Bank. Retrieved 29 September 2019.
  4. ^ "Subnational population estimates (RC, SA2), by age and sex, at 30 June 1996-2023 (2023 boundaries)". Statistics New Zealand. Retrieved 25 October 2023. (regional councils); "Subnational population estimates (TA, SA2), by age and sex, at 30 June 1996-2023 (2023 boundaries)". Statistics New Zealand. Retrieved 25 October 2023. (territorial authorities); "Subnational population estimates (urban rural), by age and sex, at 30 June 1996-2023 (2023 boundaries)". Statistics New Zealand. Retrieved 25 October 2023. (urban areas)
  5. ^ a b c d "Report for Selected Countries and Subjects: April 2023". imf.org. International Monetary Fund.
  6. ^ a b c "The outlook is uncertain again amid financial sector turmoil, high inflation, ongoing effects of Russia's invasion of Ukraine, and three years of COVID". International Monetary Fund. 11 April 2023.
  7. ^ (PDF). New Zealand Treasury. 2012. pp. 19–23. Archived from the original (PDF) on 4 May 2017. Retrieved 17 March 2017.
  8. ^ "Annual inflation at 7.3 percent, 32-year high". Statistics New Zealand. 18 July 2022.
  9. ^ "Relative poverty rate at 50% of the median household income in OECD countries".
  10. ^ . Statistics New Zealand. Table 9. Archived from the original (Spreadsheet) on 24 February 2020. Retrieved 24 February 2020.
  11. ^ "Human Development Index (HDI)". hdr.undp.org. HDRO (Human Development Report Office) United Nations Development Programme. Retrieved 5 October 2022.
  12. ^ Nations, United. "Inequality-adjusted HDI (IHDI)". hdr.undp.org. UNDP. Retrieved 5 October 2022.
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  18. ^ "Ease of Doing Business in New Zealand". Doingbusiness.org. Retrieved 24 November 2017.
  19. ^ a b c d "Overseas merchandise trade: June 2023". Stats NZ. Retrieved 27 October 2023.
  20. ^ "Balance of Payments and International Investment Position – M7". Statistics New Zealand. Reserve Bank of New Zealand. 19 December 2018. Retrieved 23 February 2019.
  21. ^ a b c "Financial Statements of the Government of New Zealand for the eight months ended 28 February 2018". New Zealand Treasury. 8 April 2018. Retrieved 17 February 2019.
  22. ^ "Sovereigns rating list". Standard & Poor's. Retrieved 26 May 2011.
  23. ^ a b c Rogers, Simon; Sedghi, Ami (15 April 2011). "How Fitch, Moody's and S&P rate each country's credit rating". The Guardian. London. Retrieved 31 May 2011.
  24. ^ "New Zealand Foreign Exchange Reserves, 2005–2023 | CEIC Data". www.ceicdata.com. Retrieved 8 August 2023.
  25. ^ Hall, Peter A.; Soskice, David (2001). Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford University Press. p. 570. ISBN 978-0191647703.
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  27. ^ "NZ Tech – About the Tech Sector". Retrieved 7 January 2020.
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  30. ^ a b c "Early pastoral economy". Te Ara: The Encyclopedia of New Zealand. p. 4.
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  38. ^ a b "Early Māori economies". Te Ara: The Encyclopedia of New Zealand. p. 2. Retrieved 9 December 2014.
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  41. ^ Warwick Robert Armstrong. "Vogel, Sir Julius, K.C.M.G". Te Ara: The Encyclopedia of New Zealand.
  42. ^ "Boom and bust, 1870–1895". Te Ara: The Encyclopedia of New Zealand. p. 5. Retrieved 11 December 2014.
  43. ^ a b "Refrigeration, dairying and the Liberal boom". Te Ara: The Encyclopedia of New Zealand.
  44. ^ Baten, Jörg (2016). A History of the Global Economy. From 1500 to the Present. Cambridge University Press. p. 287. ISBN 978-1107507180.
  45. ^
economy, zealand, economy, zealand, highly, developed, free, market, economy, 52nd, largest, national, economy, world, when, measured, nominal, gross, domestic, product, 62nd, largest, world, when, measured, purchasing, power, parity, zealand, large, populatio. The economy of New Zealand is a highly developed free market economy 25 It is the 52nd largest national economy in the world when measured by nominal gross domestic product GDP and the 62nd largest in the world when measured by purchasing power parity PPP New Zealand has a large GDP for its population of 5 million and sources of revenue are spread throughout the large island nation The country has one of the most globalised economies and depends greatly on international trade mainly with Australia China the European Union Japan Singapore South Korea not verified in body and the United States New Zealand s 1983 Closer Economic Relations agreement with Australia means that the economy aligns closely with that of Australia Economy of New ZealandAuckland s central business district at nightCurrencyNew Zealand dollar NZD NZ Fiscal year1 July 30 June 1 Trade organisationsAPEC CPTPP WTO and OECDCountry groupDeveloped Advanced 2 High income economy 3 StatisticsPopulation5 223 100 June 2023 estimate 4 GDPUS 252 billion nominal 2023 5 US 279 billion PPP 2023 5 GDP rank52nd nominal 2023 62nd PPP 2023 GDP growth2 4 2022 6 1 1 2023f 6 0 8 2024f 6 GDP per capitaUS 48 826 nominal 2023 5 US 54 046 PPP 2023 5 GDP per capita rank21st nominal 2023 33rd PPP 2023 GDP by sectorPrimary industries 7 6 Manufacturing 12 2 Services 71 2011 7 Inflation CPI 7 3 June 2022 8 Population below poverty line11 0 relative 2014 9 Gini coefficient33 9 medium 2019 10 Human Development Index0 937 very high 2021 11 13th 0 865 very high IHDI 13th 2021 12 Labour force2 820 million Q2 2022 13 68 5 employment rate Q2 2022 13 70 8 labour force participation rate Q2 2022 13 Labour force by occupationAgriculture 6 6 Industry 20 7 Services 72 7 2017 est 14 Unemployment3 3 Q2 2022 13 96 thousand Q2 2022 13 Average gross salaryNZ 5 882 3 455 82 monthly 15 2022 Average net salaryNZ 4 698 2 758 99 monthly 16 17 2022 Main industriesFood processing Agriculture Forestry Wool Tourism Financial ServicesEase of doing business rank1st very easy 2020 18 ExternalExports 72 8 billion FY 2022 23 19 Export goodsDairy products meat logs and wood products fruit wine machinery and equipment fish and seafoodMain export partners China 28 2 Australia 12 6 United States 11 3 European Union 6 4 Japan 5 7 FY 2022 3 19 Imports 88 8 billion FY 2022 23 19 Import goodsPetroleum vehicles machinery and equipment electronics textiles plasticsMain import partners China 21 6 European Union 14 7 Australia 10 8 United States 9 4 South Korea 7 1 FY 2022 23 19 FDI stock 84 19 billion 31 December 2017 est 14 Abroad 16 74 billion 31 December 2016 est 14 Current account 5 471 billion 2017 est 14 Gross external debtNZ 156 181 billion 53 of GDP December 2018 20 NZ 86 342 billion 30 5 of GDP Feb 2018 21 Public financesGovernment debt31 7 of GDP 2017 est 14 Budget balance 1 6 of GDP 2017 est 14 Revenues74 11 billion 2017 est 14 Expenses70 97 billion 2017 est 14 Economic aidAs donor 99 7 million FY99 00 Credit ratingStandard amp Poor s 22 AAA Domestic AA Foreign AAA T amp C assessment Outlook Negative 23 Moody s 23 AAAOutlook StableFitch 23 AA Outlook NegativeForeign reserves 10 02 billion June 2023 est 24 Main data source CIA World Fact Book All values unless otherwise stated are in US dollars New Zealand s diverse economy has a sizable service sector accounting for 63 of all GDP activity as of 2013 update 26 Large scale manufacturing industries include aluminium production food processing metal fabrication wood and paper products Mining manufacturing electricity gas water and waste services accounted for 16 5 of GDP as of 2013 update 26 The primary sector continues to dominate New Zealand s exports despite accounting for only 6 5 of GDP as of 2013 update 26 The information technology sector is growing rapidly 27 The major capital market is the New Zealand Exchange NZX As of February 2023 update NZX had a total of 338 listed securities equity debt and funds with a combined market capitalisation of NZD 226 billion 28 New Zealand s currency the New Zealand dollar informally known as the Kiwi dollar also circulates in four Pacific Island territories The New Zealand dollar is the 10th most traded currency in the world 29 Contents 1 History 1 1 Early years 1 2 20th century 1 2 1 Think Big 1 2 2 Rogernomics 1 3 21st century 1 3 1 Finance company collapses 2006 2012 1 3 2 Rock star economy 1 3 3 2020 22 recession 2 Overview 2 1 Taxation 2 2 Corruption 2 3 Regional economies 2 4 Unemployment 2 5 Housing affordability 2 6 Inequality 2 7 Superannuation 2 8 Consumption 3 Infrastructure 3 1 Transport 3 1 1 Road network 3 1 2 Railway network 3 1 3 Airways 3 1 4 Seaports 3 2 Telecommunications 3 2 1 Internet 3 3 Energy 3 3 1 Electricity 3 4 Water 4 Trade 4 1 Trade agreements 4 2 China 4 3 Australia 4 4 European Union 4 5 United States 4 6 Japan and other Asian economies 4 7 Relationship with Pacific Islands 5 Foreign investment 5 1 Impact 6 Data 7 See also 8 References 9 Further reading 10 External linksHistory editMain article Economic history of New Zealand nbsp Agriculture especially dairy farming such as for the Fonterra plant shown is a major export earner nbsp An aerial view of the Kinleith Mill Forestry exports are an important component of New Zealand s economy For many years New Zealand s economy was built on a narrow range of agricultural products such as wool meat and dairy These products became New Zealand s staple and most valuable exports underpinning the success of the economy from the 1850s until the 1970s 30 For example from 1920 to the late 1930s the dairy export quota was usually around 35 of New Zealand s total exports and in some years made up almost 45 31 Due to the high demand for these primary products manifested by the New Zealand wool boom of 1951 New Zealand had one of the highest standards of living in the world for 70 years 32 In the 1960s prices for these traditional exports declined and in 1973 New Zealand lost its preferential trading position with the United Kingdom when the latter joined the European Economic Community Partly as a result from 1970 to 1990 the relative New Zealand GDP per capita adjusted for purchasing power declined from about 115 of the OECD average to 80 33 Between 1984 and 1993 New Zealand changed from a somewhat closed and centrally controlled economy to one of the most open economies in the OECD 34 In a process often referred to in New Zealand as Rogernomics successive governments introduced policies which dramatically liberalised the economy In 2005 the World Bank praised New Zealand as the most business friendly country in the world 35 36 The economy diversified and by 2008 tourism had become the single biggest generator of foreign exchange 37 Early years edit Prior to European settlement and colonisation of New Zealand Maori had a subsistence economy the basic economic unit of which was the sub tribe or hapu 38 From the 1790s the waters around New Zealand were visited by British French and American whaling sealing and trading ships Their crews traded European goods including guns and metal tools for Maori food water wood flax and sex 39 Their increasing lawlessness and plans for formal settlement by the New Zealand Company were two of the drivers behind the signing of the Treaty of Waitangi in 1840 which established New Zealand as a colony Settlers continued to be dependent on Maori for food until the 1860s 38 39 From then immigrants became self sufficient in farming and started quarrying a variety of minerals including gold which was discovered at Gabriel s Gully in Central Otago leading to the Otago Gold Rush in 1861 Settlements flourished in areas where these quarries were established In the 1880s Dunedin became the richest city in the country largely on the back of investments from the gold rush 40 Sheep farming began in the Wairarapa but soon spread up and down the east coast from Southland to the East Cape once rudimentary roads and transport became available Much of the land used for farming was taken or leased from Maori Sheep numbers grew quickly and by the mid 1850s there were already a million sheep in New Zealand by the early 1870s there were 10 million 30 Wool became the first staple export initially exported from the Wellington settlement in the late 1850s although unrefrigerated meat and dairy products were exported as far as Australia 30 In the 1870s Julius Vogel was periodically both colonial treasurer and premier He viewed New Zealand as a Britain of the South Seas 41 and began the development of infrastructure in New Zealand investing heavily in roads railways telegraphs and bridges funded by public borrowing 42 Progress slowed after the collapse of the City of Glasgow Bank in 1878 which led to a contraction in credit from London the centre of the world s financial system at the time Economic activity was depressed for some years afterwards until refrigeration was introduced in 1882 32 This enabled New Zealand to start exporting meat and other frozen products to the United Kingdom Refrigeration transformed and shaped the development of the economy but in the process established New Zealand s economic dependence on Britain The success of refrigeration was directly related to the growth and development of farming in the country In the 19th century the bulk of economic activity was in the South Island of New Zealand From around 1900 dairy farming became increasingly viable in areas which were less suitable for sheep particularly in Northland the Waikato and Taranaki As dairying developed the North Island slowly became more important to the economy 43 Britain led on to be the sole market for meat and animal products in New Zealand owing to the increase in its land cultivation and farming The dairy farming can therefore be seen as a response to the powerful market demands in Europe transforming not only New Zealand s countryside economy and production techniques but also causing migration in order to create the needed supply of dairy farming 44 20th century edit The Reserve Bank of New Zealand was established as New Zealand s central bank on 1 August 1934 Up until that time New Zealand s monetary policy had been set in the United Kingdom and the New Zealand Pound was issued by private banks A separate central bank gave New Zealand s government control of monetary policy for the first time 45 although New Zealand remained part of the sterling area by pegging its pound to the British pound sterling until the introduction of the New Zealand dollar in 1967 after which the dollar was instead pegged to the United States dollar 46 By the mid 20th century pastoral farming products made up more than 90 of New Zealand s exports 43 65 of which was going to Britain in the 1950s Having a secure market with guaranteed prices also enabled New Zealand to impose high tariffs on imported goods from other countries Tough import controls gave local manufacturers the ability to produce similar products locally broaden the base of jobs available in New Zealand and still compete against higher priced imports This prosperity continued up to 1955 at which point Britain stopped giving New Zealand guaranteed prices for its exports 47 From then on what New Zealand received was dictated by the free market As a result during the 1950s and 1960s the country s standard of living began to slip as the export sector was no longer able to pay for the level of imported goods required to meet the country s growing consumerism nbsp Tiwai Point Aluminium Smelter opened in 1971Britain applied to join the European Economic Community EEC in 1961 but was vetoed by the French The government of Keith Holyoake reacted by attempting to diversify New Zealand s export markets signing the first free trade agreement Australia New Zealand Free Trade Agreement in 1965 48 and opening new diplomatic posts in Hong Kong Jakarta Saigon Los Angeles and San Francisco 31 Britain applied again to join the EEC in 1967 and entered into negotiations for membership in 1970 Holyoake s deputy and successor Jack Marshall briefly Prime Minister in 1972 negotiated continued access for New Zealand exports to the United Kingdom under the so called Luxembourg Agreement 49 Britain gained full membership of the EEC on 1 January 1973 and all trade agreements with New Zealand came to an end except the Luxembourg Agreement 49 By the end of that year only 26 8 of New Zealand s exports were to Britain 50 This had a significant effect on the standard of living In 1953 New Zealand had the third highest standard in the world By 1978 it had dropped to 22nd place 47 Having lost unrestricted access to its traditional market New Zealand continued to search for alternative export markets and diversify its economy The Government of Norman Kirk who succeeded Marshall put greater emphasis on expanding New Zealand s trade especially with South East Asia Following the Yom Kippur War in October 1973 an oil embargo was put in place by the Middle Eastern oil exporters leading to the 1973 oil crisis This compounded New Zealand s dire economic situation further Inflation greatly increased as the cost of transport and imported goods soared causing standards of living to decline 51 Think Big edit Main article Think Big Following the 1979 energy crisis resulting from the Iranian Revolution of that year Robert Muldoon the prime minister between 1975 and 1984 instituted an economic strategy known as Think Big Large scale industrial plants were established based on New Zealand s abundant natural gas A new range of products for export such as ammonia urea fertilizer methanol and petrol were produced and with greater use of electricity with the electrification of the North Island Main Trunk railway with the goal that this would reduce New Zealand s dependence on oil imports 37 Other projects included the Clyde Dam on the Clutha River which was built to meet a growing demand for electricity and the expansion of the New Zealand Steel plant at Glenbrook 52 The Tiwai Point Aluminium Smelter which opened in 1971 was also upgraded as part of the Think Big strategy and now brings in approximately NZ 1 billion in exports every year 53 Unfortunately for New Zealand most of these projects only came on line at the same time as oil prices dropped during the 1980s oil glut The price of crude went from more than US 90 a barrel in 1980 to about US 30 a few years later Because these Think Big projects required massive borrowing to get started public debt soared from 4 2 billion in 1975 when Muldoon became prime minister to 21 9 billion when he left office nine years later Inflation remained rampant averaging 11 in the 1980s 51 Once Labour came to power in 1984 many of these projects were sold to private industry as part of a wider sale of state assets 52 The Muldoon Government did make some moves towards deregulation however For example in 1982 it removed the transport licensing restrictions on road carriers carting goods more than 150 km and turned the Railways Department into a statutory corporation Rogernomics edit Main article Rogernomics Between 1984 and 1993 New Zealand underwent radical economic reform moving from what had probably been the most protected regulated and state dominated system of any capitalist democracy to an extreme position at the open competitive free market end of the spectrum 54 The Fourth Labour government elected in July 1984 moved away from government intervention in the economy and allowed free market mechanisms to dominate These reforms became known as Rogernomics named after minister of finance from 1984 to 1988 Roger Douglas The changes included making the Reserve Bank independent of political decisions performance contracts for senior civil servants public sector finance reform based on accrual accounting tax neutrality subsidy free agriculture and industry neutral competition regulation Government subsidies including agricultural subsidies were eliminated import regulations were loosened up the exchange rate was floated and controls on interest rates wages and prices were removed and personal rates of taxation were reduced Tight monetary policy and major efforts to reduce the government budget deficit brought the inflation rate down from an annual rate of more than 18 in 1987 The deregulation of government owned enterprises in the 1980s and 1990s reduced government s role in the economy and permitted the retirement of some public debt nbsp New Zealand Dollar Australian Dollar exchange rate nbsp NZD USD exchange rateThe new Government was faced with an exchange rate crisis the day after it was elected Speculators expected the change of government to result in a 20 devaluation of the New Zealand dollar which led to the 1984 New Zealand constitutional crisis due to Muldoon s refusal to devalue worsening the currency crisis further As a result the dollar was floated on 4 March 1985 allowing for the value of the dollar to change with the market 55 Prior to the dollar being floated the dollar was pegged against a basket of currencies 55 Financial markets were deregulated and tariffs on imported goods lowered and phased out At the same time subsidies to many industries notably agriculture were removed or significantly reduced Income and company taxes were reduced and the top marginal tax rate was reduced from 66 to 33 These were replaced by a comprehensive tax on goods and services GST initially set at 10 then increased to 12 5 and recently increased to 15 in 2011 A surtax on universal superannuation was also introduced 39 Many government departments were corporatised and from 1 April 1987 became State owned enterprises required to make a profit The new corporations shed thousands of jobs adding to unemployment Electricity Corporation 3 000 Coal Corporation 4 000 Forestry Corporation 5 000 New Zealand Post 8 000 56 The wage and price freeze of the early eighties coupled with the removal of financial restrictions and a lack of investment opportunities led to a speculative bubble on New Zealand s sharemarket sharemarket crash of 1987 in which New Zealand s sharemarket shed 60 from its 1987 peak and taking several years to recover 57 58 nbsp New Zealand money supply and inflation M3 money supply increases Housing inflation Consumer price indexInflation continued to be a major problem afflicting the New Zealand economy Between 1985 and 1992 inflation averaged 9 per year and the economy was in recession 59 The unemployment rate rose from 3 6 to 11 60 New Zealand s credit rating dropped twice and foreign debt quadrupled 59 In 1989 the Reserve Bank Act 1989 was passed creating strict monetary policy under the sole control of the Reserve Bank Governor From then on the Reserve Bank focused on keeping inflation low and stable using the Official Cash Rate OCR the price of borrowing money in New Zealand as its primary means to do so As a result inflation rates fell to an average of 2 5 in the 1990s compared to 12 in the 1970s 51 However the tightening of monetary policy contributed to rising unemployment in the early 1990s 61 The Labour Party was greatly divided over Rogernomics especially following the 1987 sharemarket crash and its effect on the economy which slumped along with the rest of the world into recession in the early 1990s The National Party was returned to power at the 1990 general election and Ruth Richardson became minister of finance under Prime Minister Jim Bolger The new Government was again thrown a major economic challenge with the then state owned Bank of New Zealand needing a bail out to stay operational Richardson s first budget in 1991 nicknamed the Mother of all Budgets 62 attempted to address constant fiscal deficits and borrowing by cutting state spending Unemployment and social welfare benefits were cut and market rents were introduced for state houses in some cases tripling the rents of low income people 63 Richardson also introduced user pays requirements in hospitals and schools 62 These reforms became known derisively as Ruthanasia By this time New Zealand s economy faced serious social problems the number of New Zealanders estimated to be living in poverty grew by at least 35 between 1989 and 1992 59 many of the promised economic benefits of the experiment never materialised 64 Gross domestic product per capita stagnated between 1986 87 and 1993 94 and by March 1992 unemployment rose to 11 1 65 Between 1985 and 1992 New Zealand s economy grew by 4 7 during the same period in which the average OECD nation grew by 28 2 66 From 1984 to 1993 inflation averaged 9 per year New Zealand s credit rating dropped twice and foreign debt quadrupled 59 Between 1986 and 1993 the unemployment rate rose from 3 6 to 11 67 nbsp Since the deregulation of the postal sector different postal operators can install mail collection boxes in New Zealand s streetsDeregulation also created a business friendly regulatory framework which has benefited those able to take advantage of it A 2008 survey in The Heritage Foundation and The Wall Street Journal ranked New Zealand 99 9 in Business freedom and 80 overall in Economic freedom noting that it takes on average only 12 days to establish a business in New Zealand compared with a worldwide average of 43 days 68 Deregulation has also been blamed for other significant negative effects One of these was the leaky homes crisis whereby the loosening up of building standards in the expectation that market forces would assure quality led to many thousands of severely deficient buildings mostly residential homes and apartments being constructed over a period of a decade The costs of fixing the damage has been estimated at over NZ 11 billion as at 2009 update 69 21st century edit Unemployment continued to fall from 1993 to 1994 fiscal year until the onset of the 1997 Asian financial crisis again pushed the rate higher 70 By 2016 the unemployment rate decreased to 5 3 percent the lowest level in 7 years 71 Between 2000 and 2007 the New Zealand economy expanded by an average of 3 5 a year driven primarily by private consumption and the buoyant housing market During this period inflation averaged only 2 6 a year within the Reserve Bank s target range of 1 to 3 72 However in early 2008 the economy entered recession before the effects of the global financial crisis GFC set in later that year A drought over the 2007 08 summer led to lower production of dairy products in the first half of 2008 Domestic activity slowed sharply over 2008 as high fuel and food prices dampened domestic consumption while high interest rates and falling house prices drove a rapid decline in residential investment 72 Around the world instability was developing in the finance sector This reached a peak in September 2008 when Lehman Brothers a major American bank collapsed propelling the world into the global financial crisis 73 Finance company collapses 2006 2012 edit Main article Finance company collapses 2006 2012 New Zealand nbsp New Zealand bonds Inverted yield curve in 1994 1998 and 2004 2008 20 year 10 year 2 year 3 month 1 monthUncertainty began to dominate the global financial and economic environment Business and consumer confidence in New Zealand plummeted as dozens of finance companies collapsed 74 To try and stop a flight of funds from New Zealand institutions to those in Australia the Government established the Crown Retail Deposit Guarantee Scheme to cover depositors funds in the event that a bank or finance company went broke 75 This protected some investors but nevertheless at least 67 finance companies collapsed within a short period of time 76 The largest of these was South Canterbury Finance which cost taxpayers NZ 1 58 billion when the company collapsed in August 2010 77 The directors of many of these finance companies were subsequently investigated for fraud and some high profile directors went to prison 78 79 80 81 82 In an attempt to stimulate the economy the Reserve Bank lowered the Official Cash Rate OCR from a high of 8 25 July 2008 to an all time low of 2 5 at the end of April 2009 72 Fortunately for New Zealand the recession was relatively shallow compared to many other nations in the OECD it was sixth least affected out of the 34 member nations with negative real GDP growth totaling 3 5 72 In 2009 the economy picked up led by strong demand from major trading partners Australia and China and historically high prices for New Zealand s dairy and log exports In 2010 the GDP grew by a modest 1 6 but over the next couple of years economic activity continued to improve driven by the rebuild in Canterbury after the Christchurch earthquakes and recovery in domestic demand 72 Through 2011 global conditions deteriorated and the terms of trade eased off their 2011 peak continuing to moderate until September 2012 Since then commodity prices have rebounded strongly with strong demand from China and the international situation improving Commodity prices have been at record highs in recent quarters and remain elevated High commodity prices are expected to provide a considerable boost to nominal GDP growth in the near term 72 Rock star economy edit In 2013 the economy grew 3 3 HSBC chief economist for Australia and New Zealand Paul Bloxham was so impressed that he predicted New Zealand s growth would outpace most of its peers and he described New Zealand as the rock star economy of 2014 83 Another financial commentator said the New Zealand dollar was the hottest currency of 2014 84 Only three months later the New Zealand Productivity Commission expressed concern about low living standards and problems affecting the long term drivers of growth Paul Conway Director of Economics and Research at the Productivity Commission wrote New Zealand s broad policy settings should generate GDP per capita 20 per cent above the OECD average but the actual result is more than 20 per cent below average We may be punching above our weight but that s only because we are in the wrong weight division 85 In August Bloxham admitted that the sharp decline in dairy prices over the last six months has clouded the outlook somewhat 86 In December however Bloxham stated that he thought the New Zealand economy would continue to grow strongly 87 In 2014 increased attention was paid to the growing gap between rich and poor In The Guardian Max Rashbrook said policies implemented by both Labour and National governments have increased inequality He claims that for twenty years outrage has been muted but Alarm bells are finally beginning to sound Recent polling shows three quarters of New Zealanders think theirs is no longer an egalitarian country 88 2020 22 recession edit Main article Economic impact of the COVID 19 pandemic in New Zealand New Zealand recorded its first case of COVID 19 on 28 February 2020 In response to the pandemic the country closed its borders to everyone except New Zealand citizens and residents on 19 March and went into full Level 4 lockdown from 26 March to 27 April followed by a partial Level 3 lockdown from 28 April to 13 May The border closure combined with the lockdowns saw the retail accommodation hospitality and transport sectors experiencing major declines On 17 September 2020 New Zealand officially entered a recession with the country s gross domestic product retracting by 12 2 in the June quarter 89 90 91 The GDP rebounded 14 in the September quarter to leave a 2 2 year on year retraction 92 After successfully containing the virus the New Zealand economy had sharp growth in what is known as a V shaped recovery and ended the year with an overall economic expansion of 0 4 better than the predicted 1 7 contraction 93 Unemployment also dropped to 4 9 in December 2020 down from a peak Covid effected rate of 5 3 in September 94 By 23 September 2021 the Restaurant Association s Chief executive Marisa Bidois estimated that about 1 000 hospitality businesses nationwide had been forced to close as a result of the COVID 19 pandemic leading to the loss of 13 000 jobs In response the Association lobbied the Government for Government for continued wage subsidies and incentives to boost customer rates 95 On 13 November 2021 the Bay of Plenty Times reported that 26 774 companies had been liquidated during the first eight months of 2021 96 On 27 January 2022 New Zealand s inflation rate hit a 30 year record high of 5 9 at the end of 2021 According to figures released by Statistics New Zealand the rising cost of construction petrol and rents pushed the consumer price index up 1 4 per cent between October and December 2021 Statistics NZ also recorded a two percent increase in household utilities expenses which was fuelled by the rising costs of new dwellings which rose by 16 from 2020 and a 30 percent hike in fuel prices from NZ 1 87 per litre to 2 45 per litre Prime Minister Jacinda Ardern attributed the sharp inflation rate to rising crude oil prices overseas By contrast the opposition National Party leader Christopher Luxon and Finance spokesperson Simon Bridges attributed rising inflation to the Government s alleged wasteful spending 97 On 1 February 2022 an annual report released by the Organisation of Economic Cooperation and Development OECD identified the country s border restrictions and declining house prices as the main risks facing New Zealand s economy that year While the OECD report credited New Zealand s elimination strategy and macroeconomic stimuli such as wage and socio economic subsidies with helping the economy to bounce back to pre COVID 19 levels it also warned that excessive Government spending was causing the economy to overheat and substantial increases in household and government debt The OECD welcomed the Reserve Bank s decision to raise interest rates but also urged the Government to raise the superannuation age eliminate obstacles to building houses and reduce government spending The OECD also supported the introduction of a social insurance scheme for unemployed workers 98 Overview edit nbsp New Zealand balance of payments and international investment position net international debt 2000 to 2022In 2015 the Social Progress Index which covers such areas as basic human needs foundations of well being and the level of opportunity available to citizens ranked the New Zealand economy fifth 99 However the outlook includes some challenges New Zealand income levels which used to be above those of many countries in Western Europe prior to the crisis of the 1970s dropped in relative terms and never recovered As a result the number of New Zealanders living in poverty has grown and income inequality has increased dramatically New Zealand has also had persistent current account deficits since the early 1970s peaking at 7 8 of GDP in 2006 but falling to 2 6 of GDP in FY 2014 100 The CIA World Fact Book estimates New Zealand s 2017 public debt that owed by the government at 31 7 of GDP 101 Between 1984 and 2006 net external foreign debt increased 11 fold to NZ 182 billion 35 As of 2018 update gross core crown debt was NZ 84 524 million or 29 5 of GDP and net core crown debt was NZ 62 114 million or 21 7 of GDP 21 nbsp New Zealand Government Gross Debt as percent of GDP 1860 to 2000 nbsp GDP per capita development in Australia and New ZealandDespite New Zealand s persistent current account deficits the balance on external goods and services has generally been positive In FY 2014 export receipts exceeded imports by NZ 3 9 billion 100 There has been an investment income imbalance or net outflow for debt servicing of external loans In FY 2014 New Zealand s investment income from the rest of the world was NZ 7 billion versus outgoings of NZ 16 3 billion a deficit of NZ 9 3 billion 100 The proportion of the current account deficit that is attributable to the investment income imbalance a net outflow to the Australian owned banking sector grew from one third in 1997 to roughly 70 in 2008 102 Taxation edit Main article Taxation in New Zealand At the national level the Inland Revenue Department IRD collects tax in New Zealand on behalf of the New Zealand Government New Zealanders pay national taxes on personal and business income and on the supply of goods and services GST There is no capital gains tax although certain gains such as profits on the sale of patent rights are deemed to be income Income tax does apply to property transactions in certain circumstances particularly speculation Local authorities manage and collect local property taxes rates Some goods and services carry a specific tax referred to as an excise or a duty such as alcohol excise or gaming duty These are collected by a range of government agencies such as the New Zealand Customs Service There is no social security payroll tax or land tax in New Zealand The 2010 New Zealand budget announced cuts to personal tax rates with the top personal tax rate reduced from 38 to 33 103 The cuts gave New Zealand the second lowest personal tax burden in the OECD Only Mexico s citizens retained a higher percentage wise take home proportion of their salaries 104 The cuts in income tax were estimated to reduce revenue by 2 46 billion 105 To compensate the National government raised GST from 12 5 to 15 106 Treasury figures show that top income earners in New Zealand pay between 6 and 8 of their income on GST Those at the bottom end earning less than 356 a week spend between 11 and 14 on GST Based on these figures The New Zealand Herald predicted that putting GST up to 15 would increase living costs for the poor more than twice as much as for the rich 107 Corruption edit Main article Corruption in New Zealand New Zealand ranked 1st on the Transparency International Corruption Perceptions Index CPI of 2017 with a score of 89 out of 100 108 In 2018 New Zealand ranked 2nd on the Corruption Perceptions Index with a score of 87 out of 100 109 In 2019 New Zealand ranked 1st on the Corruption Perceptions Index with a score of 87 out of 100 110 Although New Zealand is one of the least corrupt countries in the world corruption still exists in New Zealand 111 Regional economies edit nbsp Map of regions of New ZealandIn March 2023 Statistics New Zealand published details of the break down of gross domestic product in the regions of New Zealand for the year ended March 2022 112 Region map reference GDP 2021 NZ million Share of national GDP GDP per capita 2021 NZ GDP growth 2020 21Northland 1 9 321 2 6 46 611 nbsp 11 Auckland 2 136 493 37 8 80 328 nbsp 10 3 Waikato 3 32 558 9 0 63 713 nbsp 11 1 Bay of Plenty 4 21 666 6 0 62 673 nbsp 11 4 Gisborne 5 2 690 0 7 51 833 nbsp 9 4 Hawke s Bay 6 10 708 3 0 58 769 nbsp 11 3 Taranaki 7 9 599 2 7 75 643 nbsp 15 3 Manawatu Whanganui 8 14 328 4 0 55 665 nbsp 8 2 Wellington 9 44 987 12 5 82 772 nbsp 9 5 North Island 282 355 78 1 72 068 nbsp 10 4 Tasman Nelson 10 11 1 6 614 1 8 58 580 nbsp 9 8 Marlborough 12 3 466 1 0 67 045 nbsp 1 7 West Coast 13 2 101 0 6 64 063 nbsp 8 7 Canterbury 14 2 44 032 12 2 67 400 nbsp 9 7 Otago 15 15 336 4 2 62 518 nbsp 10 2 Southland 16 7 396 2 0 72 223 nbsp 10 5 South Island 78 945 21 9 65 875 nbsp 9 4 New Zealand 361 299 100 0 70 617 nbsp 10 2 Nelson and Tasman are combined by Statistics New Zealand but are separate regions Includes the Chatham Islands Unemployment edit Prior to the economic shock created by Britain s decision to join the EEC in 1973 which removed the UK as New Zealand s primary market for exports 113 unemployment in New Zealand was very low A recession and a collapse in wool prices in 1966 led to unemployment rising by 131 but still represented only a 0 7 percentage point increase in the unemployment rate 114 After 1973 unemployment became a persistent economic and social issue in New Zealand Recessions from 1976 to 1978 and from 1982 to 1983 greatly increased unemployment again 114 Between 1985 and 2012 the unemployment rate averaged 6 29 After the stock market crash of 1987 unemployment rose 170 114 reaching an all time high of 11 20 in September 1991 115 The Asian financial crisis of 1997 sent unemployment upwards again by 28 114 By 2007 it had dropped again and the rate stood at 3 5 December 2007 its lowest level since the current method of surveying began in 1986 This gave the country the 5th best ranking in the OECD with an OECD average at the time of 5 5 The low numbers correlated with a robust economy and a large backlog of job positions at all levels 116 Unemployment numbers are not always directly comparable between OECD nations as members do not all keep labour market statistics in the same way The percentage of the population employed has also increased in recent years to 68 8 of all inhabitants when with full time jobs increasing slightly and part time occupations decreasing in turn The increase in the working population percentage is attributed by whom to increasing wages and higher costs of living moving more people into employment 116 failed verification The low unemployment also had some disadvantages with many companies unable to fill jobs From December 2007 mainly as a result of the global financial crisis unemployment numbers began to rise This trend continued until September 2012 reaching a high of 6 7 They began to recover after that point sitting at 3 9 as of June 2019 update 117 Housing affordability edit Main article Housing in New Zealand Shamubeel Eaqub formerly a principal economist at the New Zealand Institute of Economic Research NZIER said in 2014 that thirty years prior an average house in New Zealand cost two or three times the average household income House prices rose dramatically in the first years of the 21st century and by 2007 an average house cost more than six times household income 118 International surveys in 2013 showed that housing was unaffordable in all eight of New Zealand s major markets unaffordable being defined as house prices which are more than three times the median regional income 119 Demand for property has been strongest in Auckland In 2014 the average sales price there went from 619 136 to 696 047 a rise of 12 in that 12 month period alone 120 In 2015 prices rose another 14 121 This made Auckland New Zealand s least affordable market and one of the most expensive cities in the world 122 with houses costing 8 times the average income 119 Between 2012 and April 2016 the average Auckland home increased in price by just over two thirds reaching 931 000 higher than the cost of an average home in Sydney 123 As a result more people are being priced out of the property market Those on low incomes are hardest hit affecting many Maori and Pasifika New Zealand s relatively high mortgage rates are exacerbating the problem 124 making it difficult for young people with steady jobs to buy their first home 125 According to a 2012 submission made to the Housing Affordability Inquiry 126 escalating house prices are also impacting on many middle income groups especially those with large families 127 Mortgage adviser Bruce Patten said the trend was disturbing and added to the gap between the haves and have nots 128 Property analysis company CoreLogic said when that 45 of house purchases in New Zealand are now made by investors who already own a home while another 28 are made by people moving from one property to another Approximately 8 of purchases go to overseas based cash buyers 118 primarily Australians Chinese and British although most quantify economists believe that foreign investment is currently when too small to have a significant effect on property prices 129 Whether purchases are made by New Zealanders or by foreigners it is generally those who are already well off who are buying the bulk of properties on the market This has had a dramatic effect on home ownership rates by Kiwis now when at its lowest level since 1951 Even as recently as 1991 76 of New Zealand homes were occupied by their owners By 2013 this had reduced to 63 130 indicating that more and more people are having to rent citation needed Raewyn Cox chief executive of the Federation of Family Budgeting says High prices and high interest rates have sentenced a rising number of New Zealanders to be lifetime tenants where they are stuck in expensive rental situations heading towards retirement 124 Inequality edit Main article Economic inequality in New Zealand nbsp An egalitarian New Zealand was briefly realised in the interwar and post war periods when successive governments sponsored a massive state housing programmeBetween 1982 and 2011 New Zealand s gross domestic product grew by 35 Almost half of that increase went to a small group who were already the richest in the country During this period the average income of the top 10 of earners in New Zealand those earning more than 72 000 131 almost doubled going from 56 300 to 100 200 The average income of the poorest tenth increased by 13 from 9700 to 11 000 132 Statistics New Zealand which keeps track of income disparity using the P80 20 ratio confirms the increase in income inequality The ratio shows the difference between high household incomes those in the 80th percentile and low household incomes those in the 20th percentile The inequality ratio increased between 1988 and 2004 and decreased until the onset of the Global Financial Crisis in 2008 increasing again to 2011 and then declining again from then By 2013 the disposable income of high income households was more than two and a half times larger than that of low income households 133 Highlighting the disparity the top 1 of the population now when owns 16 of the country s wealth citation needed the richest at one point 5 owned 38 134 while half the population including beneficiaries and pensioners earn less than 24 000 131 Superannuation edit Main article Welfare in New Zealand Pensions New Zealand has a universal superannuation scheme Only people who are aged 65 years old or over is a New Zealand citizen or permanent resident and who is residing in New Zealand at the time of application is eligible They must also have lived in New Zealand for at least 10 years since they turned 20 with five of those years being since they turned 50 Time spent overseas in certain countries and for certain reasons may be counted for New Zealand superannuation New Zealand superannuation is taxed the rate of which depends on superannuitants other income The amount of superannuation paid depends on the person s household situation For a married couple the net tax amount is set by legislation to be no less than 66 of net average wage 135 Because of the growing number of elderly becoming eligible superannuation costs rose from 7 3 billion a year in 2008 to 10 2 billion in 2014 136 In 2011 there were twice as many children in New Zealand as elderly 65 and over by 2051 there are projected to be 60 more elderly than children In the ten years from 2014 the number of New Zealanders over the age of 65 was projected to grow by about 200 000 137 This poses a significant problem for superannuation The government gradually increased the age of eligibility from 61 to 65 between 1993 and 2001 138 In that year the Labour Government of Helen Clark introduced the New Zealand Superannuation Fund known as the Cullen Fund after Minister of Finance Michael Cullen to part fund the superannuation scheme into the future As at October 2014 the fund managed NZ 27 11 billion 15 9 of which it invested within New Zealand 139 In 2007 the same Government introduced a new individual saving scheme known as KiwiSaver KiwiSaver principally targets growing people s retirement savings but younger participants can also use it to save a deposit for their first home The scheme is voluntary work based and managed by private sector companies called KiwiSaver providers As of 2014 update KiwiSaver had 2 3 million active members 60 9 of New Zealand s population under 65 NZ 4 billion was contributed annually and a total of NZ 19 1 billion has been contributed since 2007 140 Consumption edit This section needs expansion You can help by adding to it May 2021 New Zealanders see themselves as first world consumers with first world tastes and habits mitigated only slightly by the country s remoteness from main global producers Infrastructure editAccording to the National Infrastructure Unit of the Treasury New Zealand continues to face challenges to its infrastructure all forms of infrastructure are long term investments and change does not come about easily or quickly 141 A report prepared for the Association of Consulting and Engineering New Zealand in 2020 claimed that there was an infrastructure deficit of 75 billion about one quarter of GDP following decades of under investment that began in the 1980s 142 Transport edit Main article Transport in New Zealand nbsp Highways rail lines and an inter island ferry in central WellingtonNew Zealand s transport infrastructure is generally well developed 143 Road network edit Main article New Zealand state highway network The New Zealand state highway network consists of 11 000 km of road with 5981 3 km in the North Island and 4924 4 km in the South Island built and maintained by the NZ Transport Agency and paid for from general taxation and fuel excise duty Heavy road users must pay Road User Charges as well there is limited use of tolling on state highways There is also 83 000 km of local roads built and maintained by local authorities 144 Railway network edit Main article Rail transport in New Zealand The railway network is owned by state owned enterprise KiwiRail and consists of 3 898 km of railway line built to the narrow gauge of 1 067 mm 3 ft 6 in 143 Of this 506 km is electrified 145 Airways edit Main article Airports in New Zealand There are seven international airports and twenty eight domestic airports 143 Air New Zealand 52 government owned 146 is the national carrier and a state owned enterprise Airways New Zealand another state owned enterprise provides air traffic control and communications Seaports edit New Zealand has 14 international seaports 143 Telecommunications edit nbsp Telephone booths in DunedinMain article Telecommunications in New Zealand Present day telecommunications in New Zealand include telephony radio television and internet usage A competitive telecommunications market has seen mobile prices drop to some of the lowest in the OECD 147 The copper wire and fibre cable networks are mostly owned by Chorus Limited a publicly listed company Chorus wholesales services to retail providers such as Spark In the mobile sector there are three operators Spark One NZ and 2degrees Internet edit Main article Internet in New Zealand New Zealand has a high rate of internet use As of October 2014 update there are 1 916 000 broadband connections and 65 000 dial up connections in New Zealand of which 1 595 000 are residential and 386 000 are business or government 148 The majority of connections are digital subscriber line over phone lines The Government has two plans to bring Ultra Fast Broadband to 97 8 of the population by 2019 and is spending NZ 1 35 billion on public private partnerships to roll out fibre to the home connection in all main towns and cities with population over 10 000 The program aims to deliver ultra fast broadband capable of at least 100 Mbit s download and 50Mbit s upload to 75 of New Zealanders by 2019 149 In total 1 340 000 households in 26 towns and cities will be connected Gigabit internet 1000Mbit s download speeds was made available to the entire Ultra Fast Broadband UFB footprint on 1 October 2016 in an announcement from Chorus 150 A 300 million Rural Broadband Initiative RBI has also been introduced by the Government with the aim to bring broadband of at least 5Mbit s to 86 of rural customers by 2016 151 Energy edit Main article Energy in New Zealand From 1995 to 2013 the energy intensity of the economy per unit of GDP declined by 25 percent 152 A contributing factor is the growth of relatively less energy intensive service industries 153 New Zealand will be potentially among the main winners after the global transition to renewable energy is completed the country is placed very high no 5 among 156 countries in the index of geopolitical gains and losses after energy transition GeGaLo Index 154 Electricity edit Main articles New Zealand electricity market and Electricity sector in New Zealand The electricity market is regulated by the Electricity Industry Participation Code administered by the Electricity Authority EA 155 The electricity sector uses mainly renewable energy sources such as hydropower geothermal power and increasingly wind energy The 83 share of renewable energy sources 156 makes New Zealand one of the most sustainable economies in terms of energy generation 157 New Zealand suffers from a geographical imbalance between electricity production and consumption The most substantial electricity generation both existing and as remaining potential is located on the South Island and to a lesser degree in the central North Island while the main demand which is continuing to grow is in the northern North Island particularly the Auckland Region This requires electricity to be transmitted north through a power grid which is reaching its capacity more often Water edit Main article Water supply and sanitation in New Zealand As of 2021 almost all of the three waters assets drinking water stormwater and wastewater are owned by local councils and territorial authorities There are currently 67 different asset owning organisations in total 158 The challenges for local government include funding infrastructure deficits and preparing for large re investments that are estimated to require 110 billion over the next 30 to 40 years 159 There are also significant challenges in meeting statutory requirements for the safety of drinking water and the environmental expectations for management of stormwater and wastewater Climate change adaptation and providing for population growth add to these challenges A nationwide reform programme is underway with the intention of amalgamating the three waters assets into a small number of large regional publicly owned utilities 158 Trade editThis section needs to be updated Please help update this article to reflect recent events or newly available information June 2023 New Zealand s small size and long distances from major world markets creates significant challenges in its ability to compete in global markets In 2018 New Zealand s main trading partners were China Australia the European Union the United States and Japan Together these five partners account for 66 of New Zealand s two way trade 160 161 In March 2014 the total value of goods exported from New Zealand topped 50 billion for the first time up from 30 billion in 2001 162 New Zealand Trade and Enterprise NZTE offers strategic advice and support to New Zealand businesses wanting to export goods and services to other countries Trade agreements edit Main article New Zealand free trade agreements nbsp New Zealand Free trade agreements in force Free trade agreements concluded but not in forceSince 1960s New Zealand has pursued free trade agreements with many countries to diversify its export markets and increase the competitiveness of New Zealand s exports to the world 163 As well as reducing barriers to trade Trade Agreements New Zealand has entered into are designed to ensure existing access is maintained Trade agreements establish rules by which trade can take place and ensure regulators and officials in countries New Zealand is trading with work closely together 163 China edit China is New Zealand s largest trading partner buying primarily meat dairy products and pine logs In 2013 trade between New Zealand and China was worth NZ 16 8 billion 161 This has occurred primarily because of soaring demand for imported dairy products following the Chinese milk scandal in 2008 Since then demand for milk products has been so strong that in the 12 months to March 2014 there was a 51 increase in total exports to China 164 The increase was facilitated by the New Zealand China Free Trade Agreement which came into force on 1 October 2008 Since that year exports to China have more than tripled 165 Australia edit nbsp Australia New Zealand Closer Economic Relations Trade Agreement 28 March 1983 signed by Laurie Francis amp Lionel BrownAustralia was New Zealand s largest bilateral trading partner in 2013 when trade between the two countries was worth NZ 25 6 billion 161 and before China overtook Australia Economic and trading links between Australia and New Zealand are underpinned by the Closer Economic Relations CER agreement which allows for free trade in goods and most services Since 1990 CER has created a single market of more than 25 million people Australia is now the destination of 19 of New Zealand s exports including light crude oil gold wine cheese and timber as well as a wide range of manufactured items The CER also creates a free labour market which allows New Zealand and Australian citizens to live and work freely in each other s country together with mutual recognition of professional qualifications This means individuals who are registered to practise an occupation in one country can register to practise an equivalent occupation in the other country Banking regulation and supervision are co ordinated through the Trans Tasman Council on Banking Supervision and there are also ongoing discussions about co ordinating Australian and New Zealand business law 166 European Union edit The European Union is New Zealand s third largest trading partner A growing number of New Zealand companies use the United Kingdom as a base to supply their products to the European market 167 However trade with the European Union is declining as demand from Asia continues to grow The EU takes only 8 of New Zealand exports but provides around 12 of imports 166 In July 2014 negotiations on the Partnership Agreement on Relations and Cooperation PARC between New Zealand and the European Union were concluded 168 The agreement covers the trade and economic relationship between the EU and New Zealand with a view to further liberalisation of trade and investment and acknowledges the intention of the European Union to upgrade its diplomatic presence in New Zealand with a resident ambassador 169 United States edit The United States was New Zealand s third largest trading partner in 2013 when bilateral trade between the two countries was valued at NZ 11 8 billion 161 and before it was overtaken by the EU New Zealand s main exports to the United States are beef dairy products and lamb Imports from the US include specialised machinery pharmaceutical products oil and fuel In addition to trade there is a high level of corporate and individual investment between the two countries and the US is a major source of tourists coming to New Zealand In March 2012 the United States had a total of 44 billion invested in New Zealand 170 A number of US companies have subsidiary branches in New Zealand Many operate through local agents with some joint venture associations The United States Chamber of Commerce is active in New Zealand with a main office in Auckland and a branch committee in Wellington According to the Ministry of Foreign Affairs New Zealand and the United States share a deep and longstanding friendship based on a common heritage shared values and interests and a commitment to promoting a free democratic secure and prosperous world 171 This common background has not translated into a free trade agreement between the two countries 172 Japan and other Asian economies edit Japan is New Zealand s fifth largest trading partner In the 21st century Asian economies have been developing rapidly providing significant demand for New Zealand s exports New Zealand also trades with Taiwan Hong Kong Malaysia Indonesia Singapore Thailand India and the Philippines and this now accounts for around 16 of total exports 166 New Zealand initiated a free trade agreement with Singapore in September 2000 which was extended in 2005 to include Chile and Brunei and is now known as the P4 agreement Relationship with Pacific Islands edit The Pacific region with numerous islands is New Zealand s sixth largest trading market and is growing every year In 2011 exports to Pacific Islands were worth over 1 5 billion up 12 on the previous year Fiji is the biggest individual market followed very closely by Papua New Guinea French Polynesia and New Caledonia Goods exported to the islands include refined oil construction materials medicines sheep meat milk butter fruit and vegetables 173 New Zealand also assists Pacific Islands with defence and regional security and with management of the environment and fisheries Because of their small size the Pacific Islands are some of the most vulnerable environments in the world and are on the receiving end of numerous cyclones every year When disasters occur they often have severe social and economic effects which last for years Since 1992 New Zealand has co operated with Australia and France to respond to disasters in the Pacific New Zealand provides emergency supplies and transport funding for roading and housing and the deployment of specialists to affected areas 174 Through the Ministry of Foreign Affairs and Trade New Zealand also provides international aid and development funding to help stimulate sustainable economic development in underdeveloped economies The New Zealand Aid Programme allocated about 550m a year is focused primarily on promoting development in the Pacific The allocation of 550 million represents about 0 26 of New Zealand s gross national income GNI 175 Foreign investment editNew Zealand welcomes and encourages foreign investment which is overseen by the Overseas Investment Office In 2014 foreign direct investment totalled NZ 107 69 billion 21 Between 1989 and 2013 foreign investment increased from NZ 9 7 billion to NZ 101 4 billion a change of over 1 000 176 Between 1989 and 2007 foreign ownership of the New Zealand sharemarket went from 19 to 41 but has since dropped back to 33 citation needed In 2007 around 7 of all agriculturally productive land in New Zealand was foreign owned 35 In 2011 economist Bill Rosenberg claimed that the figure was closer to 9 when including foreign ownership of forestry land 177 In March 2013 the financial sector which includes the big four Australian owned banks was worth NZ 39 3 billion the largest share of the NZ 101 4 billion of foreign ownership of New Zealand companies at the time 176 Impact edit Between 1997 and 2007 foreign investors made NZ 50 3 billion profit 68 of which went overseas The Campaign Against Foreign Control of Aotearoa CAFCA says this has a negative impact on the economy arguing that when foreign investors buy up New Zealand companies they tend to cut staff and push down wages 35 It is also argued that growing foreign ownership has done nothing to reduce New Zealand s foreign debt In 1984 private and public foreign debt was NZ 16 billion NZ 50 billion in March 2013 dollars which was less than half New Zealand s GDP at the time By March 2013 total foreign debt stood at NZ 251 billion well over 100 of New Zealand s GDP 176 Data edit nbsp Tourism like here on the Milford Sound special bus with viewing gallery is a major export earner for New ZealandThe following table shows the main economic indicators in 1980 2020 with IMF staff estimates in 2021 2026 Inflation below 2 is in green 178 Year GDP bil US PPP GDP per capita US PPP GDP bil US nominal GDP per capita US nominal GDP growth real Inflation rate Unemployment Government debt in GDP 1980 28 5 9 177 3 22 5 7 246 9 nbsp 1 0 nbsp 17 1 4 0 n a1981 nbsp 32 2 nbsp 10 288 8 nbsp 23 4 nbsp 7 503 1 nbsp 3 0 nbsp 15 5 nbsp 3 9 n a1982 nbsp 35 1 nbsp 11 151 9 nbsp 23 2 nbsp 7 370 6 nbsp 2 9 nbsp 16 1 nbsp 4 4 n a1983 nbsp 36 4 nbsp 11 464 6 nbsp 22 5 nbsp 7 064 3 nbsp 0 1 nbsp 7 4 nbsp 6 2 n a1984 nbsp 40 4 nbsp 12 566 6 nbsp 22 4 nbsp 6 960 7 nbsp 6 9 nbsp 6 1 nbsp 7 2 n a1985 nbsp 42 1 nbsp 12 995 1 nbsp 22 5 nbsp 6 943 5 nbsp 1 2 nbsp 15 4 nbsp 3 9 64 2 1986 nbsp 43 8 nbsp 13 375 0 nbsp 27 4 nbsp 8 373 5 nbsp 1 8 nbsp 13 2 nbsp 4 2 nbsp 68 6 1987 nbsp 45 9 nbsp 13 915 8 nbsp 36 9 nbsp 11 189 5 nbsp 2 4 nbsp 15 8 nbsp 4 2 nbsp 63 0 1988 nbsp 47 8 nbsp 14 354 0 nbsp 45 5 nbsp 13 643 7 nbsp 0 6 nbsp 6 4 nbsp 5 8 nbsp 54 8 1989 nbsp 49 9 nbsp 14 826 9 nbsp 44 1 nbsp 13 100 0 nbsp 0 4 nbsp 5 7 nbsp 7 3 nbsp 55 0 1990 nbsp 51 8 nbsp 15 204 8 nbsp 45 8 nbsp 13 439 7 nbsp 0 0 nbsp 6 1 nbsp 8 0 nbsp 55 5 1991 nbsp 52 8 nbsp 15 112 2 nbsp 43 4 nbsp 12 426 1 nbsp 1 3 nbsp 2 6 nbsp 10 6 nbsp 58 0 1992 nbsp 54 4 nbsp 15 400 8 nbsp 41 5 nbsp 11 754 9 nbsp 0 7 nbsp 1 0 nbsp 10 7 nbsp 58 7 1993 nbsp 58 6 nbsp 16 401 6 nbsp 44 8 nbsp 12 536 1 nbsp 5 2 nbsp 1 3 nbsp 9 8 nbsp 54 6 1994 nbsp 63 2 nbsp 17 452 6 nbsp 52 9 nbsp 14 607 5 nbsp 5 6 nbsp 1 7 nbsp 8 4 nbsp 48 9 1995 nbsp 67 7 nbsp 18 415 1 nbsp 62 3 nbsp 16 938 0 nbsp 4 9 nbsp 3 8 nbsp 6 5 nbsp 43 5 1996 nbsp 71 7 nbsp 19 211 8 nbsp 69 1 nbsp 18 504 2 nbsp 4 1 nbsp 2 3 nbsp 6 3 nbsp 37 3 1997 nbsp 74 8 nbsp 19 765 5 nbsp 68 9 nbsp 18 214 2 nbsp 2 5 nbsp 1 2 nbsp 6 9 nbsp 34 6 1998 nbsp 75 8 nbsp 19 874 7 nbsp 56 8 nbsp 14 885 5 nbsp 0 3 nbsp 1 3 nbsp 7 7 nbsp 34 5 1999 nbsp 80 4 nbsp 20 955 3 nbsp 58 9 nbsp 15 340 1 nbsp 4 6 nbsp 0 1 nbsp 7 1 nbsp 32 0 2000 nbsp 85 7 nbsp 22 209 2 nbsp 54 2 nbsp 14 028 1 nbsp 4 3 nbsp 2 6 nbsp 6 2 nbsp 30 0 2001 nbsp 89 9 nbsp 23 132 6 nbsp 53 1 nbsp 13 667 8 nbsp 2 6 nbsp 2 6 nbsp 5 5 nbsp 28 2 2002 nbsp 95 6 nbsp 24 200 8 nbsp 62 0 nbsp 15 701 9 nbsp 4 7 nbsp 2 7 nbsp 5 3 nbsp 26 4 2003 nbsp 101 7 nbsp 25 237 7 nbsp 82 5 nbsp 20 480 4 nbsp 4 2 nbsp 1 8 nbsp 4 8 nbsp 24 7 2004 nbsp 109 4 nbsp 26 745 0 nbsp 101 6 nbsp 24 840 2 nbsp 4 8 nbsp 2 3 nbsp 4 0 nbsp 22 5 2005 nbsp 116 3 nbsp 28 129 3 nbsp 113 2 nbsp 27 378 7 nbsp 3 2 nbsp 3 0 nbsp 3 8 nbsp 20 8 2006 nbsp 123 4 nbsp 29 493 7 nbsp 109 7 nbsp 26 221 9 nbsp 2 9 nbsp 3 4 nbsp 3 9 nbsp 18 4 2007 nbsp 131 1 nbsp 31 031 6 nbsp 134 9 nbsp 31 909 4 nbsp 3 4 nbsp 2 4 nbsp 3 6 nbsp 16 3 2008 nbsp 133 4 nbsp 31 303 9 nbsp 135 4 nbsp 31 759 2 nbsp 0 2 nbsp 4 0 nbsp 4 0 nbsp 19 0 2009 nbsp 132 7 nbsp 30 815 5 nbsp 121 8 nbsp 28 283 7 nbsp 1 2 nbsp 2 1 nbsp 5 9 nbsp 24 3 2010 nbsp 136 6 nbsp 31 383 4 nbsp 145 3 nbsp 33 379 6 nbsp 1 8 nbsp 2 3 nbsp 6 2 nbsp 29 7 2011 nbsp 142 0 nbsp 32 377 2 nbsp 167 0 nbsp 38 063 0 nbsp 1 8 nbsp 4 0 nbsp 6 1 nbsp 34 7 2012 nbsp 144 4 nbsp 32 733 6 nbsp 175 0 nbsp 39 683 4 nbsp 2 5 nbsp 1 1 nbsp 6 5 nbsp 35 7 2013 nbsp 157 8 nbsp 35 474 6 nbsp 187 2 nbsp 42 089 5 nbsp 2 3 nbsp 1 1 nbsp 5 8 nbsp 34 6 2014 nbsp 167 2 nbsp 36 993 7 nbsp 200 1 nbsp 44 282 1 nbsp 3 7 nbsp 1 2 nbsp 5 4 nbsp 34 2 2015 nbsp 170 5 nbsp 36 971 5 nbsp 176 2 nbsp 38 200 0 nbsp 3 6 nbsp 0 3 nbsp 5 4 nbsp 34 2 2016 nbsp 185 2 nbsp 39 266 3 nbsp 186 0 nbsp 39 426 7 nbsp 3 9 nbsp 0 6 nbsp 5 2 nbsp 33 4 2017 nbsp 197 3 nbsp 40 976 0 nbsp 203 8 nbsp 42 334 7 nbsp 3 5 nbsp 1 9 nbsp 4 8 nbsp 31 1 2018 nbsp 208 9 nbsp 42 617 4 nbsp 210 0 nbsp 42 839 8 nbsp 3 4 nbsp 1 6 nbsp 4 3 nbsp 28 0 2019 nbsp 217 8 nbsp 43 686 0 nbsp 210 4 nbsp 42 210 2 nbsp 2 4 nbsp 1 6 nbsp 4 2 nbsp 32 0 2020 nbsp 215 9 nbsp 42 445 5 nbsp 209 4 nbsp 41 164 6 nbsp 2 1 nbsp 1 7 nbsp 4 6 nbsp 43 6 2021 nbsp 235 0 nbsp 45 879 6 nbsp 247 6 nbsp 48 349 0 nbsp 5 1 nbsp 3 0 nbsp 4 3 nbsp 52 0 2022 nbsp 249 5 nbsp 48 202 1 nbsp 267 6 nbsp 51 706 9 nbsp 3 3 nbsp 2 2 nbsp 4 4 nbsp 56 9 2023 nbsp 259 7 nbsp 49 462 1 nbsp 282 4 nbsp 53 795 6 nbsp 1 7 nbsp 2 0 nbsp 4 7 nbsp 58 5 2024 nbsp 270 6 nbsp 50 787 4 nbsp 294 5 nbsp 55 273 0 nbsp 1 9 nbsp 2 0 nbsp 4 9 nbsp 59 0 2025 nbsp 282 7 nbsp 52 263 7 nbsp 306 9 nbsp 56 739 2 nbsp 2 2 nbsp 2 0 nbsp 4 4 nbsp 57 8 2026 nbsp 295 5 nbsp 53 833 7 nbsp 320 0 nbsp 58 293 3 nbsp 2 4 nbsp 2 0 nbsp 4 5 nbsp 55 3 Industrial production growth rate 5 9 2004 1 5 2007 Household income or consumption by percentage shareLowest 10 0 3 1991 Highest 10 29 8 1991 Agriculture products Wheat barley potatoes pulses fruits vegetables wool beef dairy products fish Exports commodities Dairy products meat wood and wood products fish machinery Imports commodities Machinery and equipment vehicles and aircraft petroleum electronics textiles plastics ElectricityConsumption 34 88 TWh 2001 37 39 TWh 2006 Production 38 39 TWh 2004 42 06 TWh 2006 Exports 0 kWh 2006 Imports 0 kWh 2006 Electricity production by source 156 179 Hydro 60 2020 Geothermal 17 2020 Wind 5 2020 Fossil fuel 17 2020 Nuclear 0 2020 Other 3 4 2010 OilProduction 42 160 barrels 6 703 m3 2001 25 880 barrels 4 115 m3 2006 Consumption 132 700 barrels 21 100 m3 2001 156 000 barrels 24 800 m3 2006 Exports 30 220 barrels 4 805 m3 2001 15 720 barrels 2 499 m3 2004 Imports 119 700 barrels 19 030 m3 2001 140 900 barrels 22 400 m3 2004 Proven reserves 89 62 million barrels 14 248 000 m3 January 2002Exchange rates New Zealand dollars NZ per US 1 1 4771 2016 1 2652 2012 1 3869 2005 1 5248 2004 1 9071 2003 2 1622 2002 2 3788 2001 2 2012 2000 1 8886 1999 1 8632 1998 1 5083 1997 1 4543 1996 1 5235 1995 See also editAgriculture in New Zealand Economy of Oceania Energy in New Zealand History of the banking sector in New Zealand New Zealand electricity market Oil and gas industry in New Zealand Foreign trade of New Zealand Median household income in Australia and New Zealand Ministry of Business Innovation and Employment Reserve Bank of New Zealand Telecommunications in New ZealandReferences edit Year End Financial Statements NZ Treasury Retrieved 5 March 2017 World Economic Outlook Database April 2019 IMF org International Monetary Fund Retrieved 29 September 2019 World Bank Country and Lending Groups datahelpdesk worldbank org World Bank Retrieved 29 September 2019 Subnational population estimates RC SA2 by age and sex at 30 June 1996 2023 2023 boundaries Statistics New Zealand Retrieved 25 October 2023 regional councils Subnational population estimates TA SA2 by age and sex at 30 June 1996 2023 2023 boundaries Statistics New Zealand Retrieved 25 October 2023 territorial authorities Subnational population estimates urban rural by age and sex at 30 June 1996 2023 2023 boundaries Statistics New Zealand Retrieved 25 October 2023 urban areas a b c d Report for Selected Countries and Subjects April 2023 imf org International Monetary Fund a b c The outlook is uncertain again amid financial sector turmoil high inflation ongoing effects of Russia s invasion of Ukraine and three years of COVID International Monetary Fund 11 April 2023 New Zealand Economic and Financial Overview PDF New Zealand Treasury 2012 pp 19 23 Archived from the original PDF on 4 May 2017 Retrieved 17 March 2017 Annual inflation at 7 3 percent 32 year high Statistics New Zealand 18 July 2022 Relative poverty rate at 50 of the median household income in OECD countries Household income and housing cost statistics Year ended June 2019 Statistics New Zealand Table 9 Archived from the original Spreadsheet on 24 February 2020 Retrieved 24 February 2020 Human Development Index HDI hdr undp org HDRO Human Development Report Office United Nations Development Programme Retrieved 5 October 2022 Nations United Inequality adjusted HDI IHDI hdr undp org UNDP Retrieved 5 October 2022 a b c d e Labour market statistics June 2022 quarter Stats NZ www stats govt nz Stats NZ Retrieved 3 August 2022 a b c d e f g h The World Factbook CIA gov Central Intelligence Agency Retrieved 23 October 2019 Home 1 2 Ease of Doing Business in New Zealand Doingbusiness org Retrieved 24 November 2017 a b c d Overseas merchandise trade June 2023 Stats NZ Retrieved 27 October 2023 Balance of Payments and International Investment Position M7 Statistics New Zealand Reserve Bank of New Zealand 19 December 2018 Retrieved 23 February 2019 a b c Financial Statements of the Government of New Zealand for the eight months ended 28 February 2018 New Zealand Treasury 8 April 2018 Retrieved 17 February 2019 Sovereigns rating list 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