New Zealand Economy

Agriculture is the mainstay of the economy, although industry employs more people. The agricultural sector has diversified from a reliance on sheep raising to such additional enterprises as dairying, forestry, and horticulture. The principal exports are wool, meat, dairy products, fish, fruit and timber products. Small amounts of coal, gold, iron and natural gas are also produced. Food processing is the largest manufacturing industry; and there is a variety of small light-manufacturing industries. Beginning in the 1980s, New Zealand transformed its highly protected and regulated economy into one that was much more privatised, market oriented and deregulated.

The economy has been subjected to two major crises in last 30 years: first, in 1968, the loss of the protected market for its agricultural goods when the United Kingdom joined the European Community (now the European Union) and second, inflation and stagnation in the early 1980s in the aftermath of the second international oil shock. The first produced a government-led program to transform the economy into an independent, more industrialised competitor in the world market, and the second, a neo-liberal transformation of the economy combining a strict monetary regime to eliminate inflation, liberalisation of the country’s trade and investment regimes, and deregulation and privatisation of the domestic economy. The liberalisation and stabilisation program transformed New Zealand from a heavily protected and regulated economy to one of the most market-oriented and open in the world. By 1996, New Zealand was posting annual growth rates in real GDP of 5–6%, surpluses in the government’s budget, and a per capita GDP in line with those of the big European economies. Subsequent disruptions, however, resulting in declines in industrial production and per capita income, have raised concerns that the gap is no longer closing. The Asian financial crisis erupting in the second half of 1997 helped lower annual growth to 3.1% in 1997, and, combined with a summer drought, push the economy into recession in the first half of 1998. The economy recovered sufficiently to register a positive 1.9% growth for 1998, and 3.5% in 1999. Despite increased fuel cost that sent inflation to 4% in 2000 (outside the government’s target range of 0 to 3%), real GDP growth improved to 4.6%.

The global slowdown in early 2001, exacerbated by the effects of the 11 September 2001 terrorist attacks on the United States, had a relatively mild impact on New Zealand’s economy, reducing real GDP growth to 2.3%. While inflation moderated to 2.1% the government continued operating in the black with an operating surplus and positive returns from state enterprises, although the budget surplus has been steadily declining from 2.6% of GDP in 1999/98 to 0.8% of GDP in 2000/01. Part of the operating surplus fed the first contribution in 2002 to the New Zealand Superannuation (NZS) Fund established in 2001. The NZS is an investment fund designed to generate money to assure that public pensions are covered for the country’s aging population. The current account deficit, a combination of a small merchandise trade surplus and a large deficit on investment income, fell from 7% of GDP to 4.8% of GDP in 2001. Gross public debt fell from 36% of GDP in 1999 to 30% of GDP in 2002, in line with the target set by government planners.

Economy – Overview

Over the past 20 years the government has transformed New Zealand from an agrarian 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 (but left behind many at the bottom of the ladder), broadened and deepened the technological capabilities of the industrial sector, and contained inflationary pressures. Per capita income has risen for eight consecutive years and was more than $25,500 in 2006 in purchasing power parity terms. Consumer and government spending have driven growth in recent years, and exports picked up in 2006 after struggling for several years. Exports are equal to about 28% of GDP, down from 33 percent of GDP in 2001. Thus far the economy has been resilient, and the Labour Government promises that expenditures on health, education and pensions will increase proportionately to output.

GDP (purchasing power parity) :
$106 billion (2006 est.)

GDP (official exchange rate) :
$98.77 billion (2006 est.)

GDP – real growth rate :
1.9% (2006 est.)

GDP – per capita (PPP) :
$26,000 (2006 est.)

GDP – composition by sector :
agriculture: 4.3%
industry: 26.9%
services: 68.8% (2006 est.)

Labour force :
2.18 million (2006 est.)

Labour force – by occupation :
agriculture: 10%
industry: 25%
services: 65% (1995)

Unemployment rate :
3.8% (2006 est.)

Population below poverty line :
NA%

Household income or consumption by percentage share :
lowest 10%: NA
highest 10%: NA (1991 est.)

Distribution of family income – Gini index :
36.2 (1997)

Inflation rate (consumer prices) :
3.8% (2006 est.)

Investment (gross fixed) :
22% of GDP (2006 est.)

Budget :
revenues: $41.51 billion
expenditures: $36.99 billion; including capital expenditures of $NA (2006 est.)

Public debt :
19.9% of GDP (2006 est.)

Agriculture – products :
wheat, barley, potatoes, pulses, fruits, vegetables; wool, beef, lamb and mutton, dairy products; fish

Industries :
food processing, wood and paper products, textiles, machinery, transportation equipment, banking and insurance, tourism, mining

Industrial production growth rate :
1.2% (2006 est.)

Electricity – production :
41.1 billion kWh (2004)

Electricity – production by source :
fossil fuel: 31.6%
hydro: 57.8%
nuclear: 0%
other: 10.7% (2001)

Electricity – consumption :
38.22 billion kWh (2004)

Electricity – exports :
0 kWh (2004)

Electricity – imports :
0 kWh (2004)

Oil – production :
27,860 bbl/day (2004 est.)

Oil – consumption :
150,600 bbl/day (2004 est.)

Oil – exports :
30,220 bbl/day (2001)

Oil – imports :
119,700 bbl/day (2001)

Oil – proved reserves :
89.62 million bbl (1 January 2002)

Natural gas – production :
4.35 billion cu m (2004 est.)

Natural gas – consumption :
4.349 billion cu m (2004 est.)

Natural gas – exports :
0 cu m (2004 est.)

Natural gas – imports :
0 cu m (2004 est.)

Natural gas – proved reserves :
33.36 billion cu m (1 January 2005 est.)

Current account balance :
$-7.944 billion (2006 est.)

Exports :
$23.69 billion (2006 est.)

Exports – commodities :
dairy products, meat, wood and wood products, fish, machinery

Exports – partners :
Australia 21.4%, US 14.1%, Japan 10.6%, China 5.1%, UK 4.7% (2005)

Imports :
$25.23 billion (2006 est.)

Imports – commodities :
machinery and equipment, vehicles and aircraft, petroleum, electronics, textiles, plastics

Imports – partners :
Australia 20.9%, US 11%, Japan 11%, China 10.9%, Germany 4.9% (2005)

Reserves of foreign exchange and gold :
$10 billion (2006 est.)

Debt – external :
$47 billion (2006 est.)

Economic aid – donor :
ODA, NA (2006 est.)

Currency (code) :
New Zealand dollar (NZD)

Exchange rates :
New Zealand dollars per US dollar – 1.5408 (2006), 1.4203 (2005), 1.5087 (2004), 1.7221 (2003), 2.1622 (2002)

Fiscal year :
1 July – 30 June

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