[96] 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. Source: 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. 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. 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. © 2020 by The Heritage Foundation. Some goods and services carry a specific tax, referred to as an excise or a duty such as alcohol excise or gaming duty. This gave the country the 5th-best ranking in the OECD (with an OECD average at the time of 5.5%). The economy of New Zealand has ranked as one of the freest in the world over the past 25 years. [126], 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 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. As a result, inflation rates fell to an average of 2.5% in the 1990s, compared to 12% in the 1970s. 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%.[88]. His work extends into climate change policy, renewable energy and travel and he has particular expertise in small island developing states (SIDS). Submission of the New Zealand Council of Trade Unions to the Productivity Commission on the Housing Affordability Inquiry, February 2012, p. 5, sfn error: no target: CITEREFRusell1996 (, New Zealand Institute of Economic Research, Australia New Zealand Free Trade Agreement, Finance company collapses, 2006–2012 (New Zealand), Campaign Against Foreign Control of Aotearoa, Median household income in Australia and New Zealand, Ministry of Business, Innovation and Employment, "World Economic Outlook Database, April 2019", "Estimated resident population of New Zealand at 30 September 2019", "World Economic Outlook Database, October 2019", "World Economic Outlook Database, April 2020", "New Zealand Economic and Financial Overview", "Consumers price index: June 2019 quarter | Stats NZ", "Relative poverty rate at 50% of the median household income in OECD countries", "Household income and housing-cost statistics: Year ended June 2019", "Labour market statistics: June 2019 quarter", "Goods and services trade by country: Year ended March 2020", "Balance of Payments and International Investment Position – M7", "Financial Statements of the Government of New Zealand for the eight months ended 28 February 2018", "How Fitch, Moody's and S&P rate each country's credit rating", "NZX Limited – Monthly Shareholder Metrics", "Triennial Central Bank Survey, April 2013", "World Economic Outlook Database, April 2012", "National Accounts (Income and Expenditure): Year ended March 2014", "Foreign owners muscle in as New Zealand sells off all its assets", "The banks, the current account, the financial crisis and the outlook", "NZ earners' tax burden second-lowest in OECD", "Transparency International Corruption Perceptions Index 2017", https://www.transparency.org.nz/examples-of-corruption-in-new-zealand/, "Regional Gross Domestic Product: Year ended March 2015", "An Economic History of New Zealand in the Nineteenth and Twentieth Centuries", "How bad is the Current Recession? [91], 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. The overall tax burden equals 32.0 percent of total domestic income. Latest Update: October 2020, Turvallinen työkalu kansainvälistä kauppaa varten. [24] [146][147] In March 2014, the total value of goods exported from New Zealand topped $50 billion for the first time, up from $30 billion in 2001. A surtax on universal superannuation was also introduced. [138] Only three months later, the New Zealand Productivity Commission expressed concern about low living standards and problems affecting the long-term drivers of growth. Property Rights 93.3 Create a Graph using this measurement, Judicial Effectiveness 79.1 Create a Graph using this measurement, Government Integrity 93.9 Create a Graph using this measurement. Industry represents 19.2% of GDP and 20.4% of the workforce. By 2013, this was down to 63%, indicating that more and more people are having to rent. New Zealand dollars (NZ$) 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). There are seven international airports and twenty-eight domestic airports. To find out about the latest public health situation in New Zealand and the current sanitary measures in vigour, please consult the COVID-19 Alert System page. The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. Previous engines of growth are not revving as they once were and the economy is facing headwinds. Join the KiwiSaver scheme others look up to, Support for your banking through COVID-19, ANZ Business insights Other important sectors include retail and wholesale trade, restaurants and hotels. Note 2: The following indicators were updated by the IMF in April 2020: GDP (Constant Prices, Annual % Change), Inflation Rate (%), Unemployment Rate (% of the Labour Force) and Current Account (in % of GDP); the rest of the indicators were last updated in October 2019. We present alternative scenarios to help articulate the degree of uncertainty around our central outlook. Headline inflation looks set to rise, but much of this will be transitory and the RBNZ will look through it. [154] This common background has not translated into a free trade agreement between the two countries.[155]. kindness. [150] 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. As dairying developed, the North Island slowly became more important to the economy. [111][112], Inflation continued to be a major problem afflicting the New Zealand economy. By 2013, the disposable income of high-income households was more than two-and-a-half times larger than that of low-income households. The New Zealand economy reached a new milestone in the year ending June 2019, with the size of the economy breaking the $300 billion dollar mark in current price terms for the first time. New Zealand’s change in policy represents a shift that economists have long theorized could be a more effective use of government spending . [153] A number of US companies have subsidiary branches in New Zealand. , it makes it the ideal nation to lead a change in global views. New Zealand's GDP grew 2.2% in 2019  against 3.2% in 2018 - and is expected to fall to -7.2% in 2020 due to the outbreak of the COVID-19 and pick up to 5.9% in 2021, according to the updated IMF forecasts from 14th April 2020. "[54], Between 1982 and 2011, New Zealand's gross domestic product grew by 35%. Since that year exports to China have more than tripled.[152]. IMF – World Economic Outlook Database, To find out about the latest status of the COVID19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in New Zealand, please visit the New Zealand Ministry of Health’s, To find out about the latest public health situation in New Zealand and the current sanitary measures in vigour, please consult the, For information on the travel restrictions undertaken by the New Zealand government, please consult the, For information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), refer to, For information on the economic recovery scheme put in place by the New Zealand government to address the impact of the COVID19 pandemic on the New Zealand economy, refer to the Treasury’s, For information on the local business support scheme established by the New Zealand government to help small and medium-sized companies to deal with the economic impacts of the COVID19 epidemic on their activity, refer to the, OECD Economic Outlook Interim Report Coronavirus: the world economy at risk (March 2020), IMF's policy tracking platform Policy Responses to COVID-19, Economic freedom in the world (interactive map), 2019 Index of Economic Freedom, Heritage Foundation, The Economist - Business Environment Rankings 2014-2018, Ministry of Business, Innovation and Employment, COVID-19: Information for businesses webpages, World Bank's Map of SME-Support Measures in Response to COVID-19. New Zealand's economy is based on agriculture and services such as tourism, retail, and wholesale trade. [107], 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. Recent polling shows three-quarters of New Zealanders think theirs is no longer an egalitarian country". In his 2017 publication, Harris explains how the island nation would be better served working towards integrating traditional community values focusing on collective welfare in order to tackle large issues such as climate change or social inequality. The Muldoon Government did make some moves towards deregulation however. COVID-19 / Coronavirus Information for Exporters. [31] As of June 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. [57] Mortgage adviser Bruce Patten said the trend was 'disturbing' and added to the gap between the 'haves and have-nots'. The economy of New Zealand is a highly developed free-market economy. By 1978, it had dropped to 22nd place. New Zealand provides emergency supplies and transport, funding for roading and housing and the deployment of specialists to affected areas. [48] 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. A competitive telecommunications market has seen mobile prices drop to some of the lowest in the OECD. [68], 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. The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). [125], 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. For a married couple the net tax amount is set by legislation to be no less than 66% of net average wage. The RBNZ can afford to be patient, waiting to see how the story unfolds. Fiji is the biggest individual market followed very closely by Papua New Guinea, French Polynesia and New Caledonia.