New Zealand – Economy Overview

• Capital: Wellington
• Area: 268.680 km²
• Population: 4,268,000
• GDP (PPP): US$117.616 billion
• GDP (Nominal): US$128.071 billion
• Currency: New Zealand dollar
• Time Zone: GMT+12

Historically, New Zealand's economy always relied on a narrow range of export products, primarily derived from its widespread sheep farming industry, such as wool, meat and dairy products. Between the 1920s and the 1940s, the dairy export stayed around 35% of the total of New Zealand's exports, reaching as high as 45% the total export in some years. Due to the high demand for these New Zealanders had enjoyed high living standards. With time however, these exports declined in value, and New Zealand lost its close trading relationship with the UK when it joined the European Economic Community in 1973. From 1970 to 1990, the relative New Zealand purchasing power adjusted GDP per capita declined from about 115% of the OECD average to 80%.[4]

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The New Zealand government rose to the challenge with major economical reforms since 1984, successfully shifting an agrarian economy dependent on trade relations with the British toward an industrialized, free market economy. This restructuring helped raise incomes, broadened the technological capabilities of the industrial sector, and keep inflation levels at bay. Inflation in New Zealand is still one of the lowest in the industrial world. The per capita GDP has also been catching up with the major West European economies since the 1990s, but it still has a long way to go. It now stands at around 60% of the US GDP per capita. New Zealand has also experienced a great increase in income inequality in recent years. The country's heavy dependence on international trade leaves its economy vulnerable to the economic wellbeing of Asia, Europe, and the United States.

Industry

In the shadow of New Zealand's extensive agriculture industry, other smaller industries have managed to develop nonetheless. These include food processing, textiles, machinery, transportation equipment, finance, tourism and mining.

Agriculture

New Zealand's economy has traditionally heavily relied on the solid foundation its exceptionally efficient agricultural system. Although in recent years the economy has moved towards a less agrarian economy, the centrality of this industry still prevails. Major agricultural exports include dairy products, meat, fruit and vegetables, forest products, fish and wool. New Zealand benefited greatly from many of the reforms achieved in the Uruguay Round of trade negotiations, with agriculture in general and the dairy sector in particular enjoying many new trade opportunities in the long term.

Foreign Business Relations

New Zealand is partners with Australia in "Closer Economic Relations", an agreement allowing free trade in goods and services, which has been instrumental in the economy's recovery. Today, 19% of New Zealand's exports are headed toward Australia, compared to 14% in 1983. New Zealand has also entered into a free trade agreement with Singapore in 2000, which in 2005 was extended to include Chile and Brunei. New Zealand is currently scoping out regional free trade agreements in the Pacific area.

New Zealand welcomes and encourages all foreign investments, with the consent of The Overseas Investment Commission (OIC), which is based on a national interest determination. After consent is given however, there are no performance requirements.

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