The New Zealand Economy

New Zealand has a mixed and vibrant economy that operates on free market principles. It has considerable manufacturing and service sectors complementing a highly efficient agricultural sector. Exports of goods and services such as dairy and kiwifruit account for around one third of real expenditure GDP. Over the last 30 years the economy has gone from being one of the most regulated in the OECD to one of the least regulated economies.

Rich soil and excellent growing conditions coupled with refined farming methods and advanced agricultural technology provide the ideal environment for pastoral, forestry and horticulture activities. Numerous primary commodities account for around half of all goods exports and New Zealand is one of the top five dairy exporters in the world.

New Zealand has a low-inflation environment, with monetary policy managed by the Reserve Bank. RBNZ is the nations independent central bank that is charged with preserving price stability. RBNZ has maintained a long-standing flexible exchange rate. There are no exchange controls or restrictions on bringing in or repatriating funds.

New Zealand Economy

Buoyant economy

New Zealand is ranked by the World Bank as the easiest place in the world to start a business (2015). Also it is the world’s second easiest country to do business in general. The Heritage Foundation rated New Zealand the world’s third most complimentary economy in its 2015 Index of Economic Freedom.

There are few restrictions on establishing, owning and operating a business here. By using the government’s online portals the official paperwork to set up a business can be completed in no time.

New Zealand came in third in Forbes’ ‘Best Country for Business’ report, (December 2014) just behind Denmark and Hong Kong. Learn More….

Forbes commented that “In the past 20 years the government has transformed New Zealand from an agricultural economy dependent on concessionary British market access to a more industrialized, free market economy that can compete globally. This dynamic growth has boosted real incomes and broadened and deepened the technological capabilities of the industrial sector.”

Prosperous outlook

New Zealand’s economic growth has been faster than most other developed countries in recent years. OECD commented in 2015 that: “inflation and inflation expectations are well anchored. Strong fiscal monetary policy frameworks and a healthy financial sector have yielded macroeconomic stability, underpinning growth. Employment is high, in large part thanks to flexible labor markets, business investment is robust and households and firms are optimistic.”

Present day performance

By December 2014, annual growth had risen to 3.3%, the fastest rate of expansion in six years and, according the New Zealand Treasury, one of the strongest performances in the OECD

Growth for 2015 is expected to be around 3%, supported by net migration flows, labour income growth, and construction activity. Expectations are a fall back for 2016 and 2017, largely due to undermining terms of trade, particularly for our dairy exports. This factor has been somewhat offset however by falling oil prices and a lower exchange rate which is helping exporters. From 2018, growth is forecast to pick up again.

Sharemarket performance

The New Zealand stock market has recovered strongly from the global financial crisis. An increase of 121% from 1 April 2009 to 30 June 2015. Although key economic drivers coming off their highs, steady economic growth and a weaker currency is expected to underpin corporate earnings and securities valuations in the medium term.

Company Info

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