Economic and Political Overview

flag New Zealand New Zealand: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

New Zealand's GDP fell to -2.1% in 2020 due to the outbreak of the COVID-19. Nevertheless, growth came back to +5.6% in 2021 before decreasing to 2.3% in 2022. It should only reach 1.9% in 2023 and 2% in 2024 according to the updated IMF forecasts from January 2023. The country relies heavily on consumption to bolster its GDP, although low interest rates, a benevolent fiscal and monetary policy, and increases in real wages due to declining unemployment also factor into its economic growth. Its proximity to Asia and Australia, and strong agricultural sectors also strengthen the economy. The country's entrepreneurial environment is one of the world’s most efficient and competitive.

According to the IMF, the government balance closed at -5% of GDP in 2021 and -4.8% in 2022 and is expected to be reduced to -2.2% and then -1.4% in 2023 and 2024 respectively. Due to the pandemic, the national debt increased sharply from 43.2% of GDP in 2020 to 50.8% of GDP in 2021 and 56.6% in 2022. It is projected to increase again in 2023 to 58.6% before reaching 57.9% in 2024. The inflation rate remained low in 2021 at 3.9% but reached 6.3% in 2022. It is expected to come down to 3.9% and 2.6% over the next two years according to the latest World Economic Outlook of the IMF (January 2023). Inflation pressures have intensified over the past year as the pandemic has disrupted both demand and supply, and reached a 30-year high in February 2022 (New Zealand Treasury, 2022). Economic challenges include dependence on foreign investment, high household and corporate debt, reliance on Chinese demand, insufficient skilled workers, low R&D, and shortage of housing. The economy is also vulnerable to international commodity prices, particularly dairy and meat. Strong public funds have been allocated to reconstruction of roads, railways, and the KiwiBuild Programme. Furthermore, Government has restricted access to low-skill workers and student visas to ease housing demand, which triggered fears of worker shortage and lowered population growth.

In 2023, the country’s most immediate challenge remains related to the economic, social and public health impacts of the COVID-19 pandemic as well as the recovery from severe weather events and the consequences of the war in Ukraine. The unemployment rate increased from 4.2% in 2019 to 4.6% in 2020 but came down to 3.8% in 2021 despite the negative economic impact of the COVID-19 pandemic, and 3.4% in 2022. It is expected to reach 3.9% in 2023 and 4.1% in 2024. Some key social issues faced by the New Zealander government include dealing with an ageing population and increasing health care costs, boosting employment and household incomes, reducing teen pregnancy and child poverty, and increasing housing affordability.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 242.02249.42247.54256.36269.46
GDP (Constant Prices, Annual % Change) 2.71.11.02.12.2
GDP per Capita (USD) 47,22648,07247,22348,40750,361
General Government Balance (in % of GDP) -4.8-5.4-5.5-3.4-1.6
General Government Gross Debt (in % of GDP) 46.446.149.952.352.0
Inflation Rate (%) n/a4.92.72.52.3
Unemployment Rate (% of the Labour Force) 3.33.84.94.54.5
Current Account (billions USD) -21.87-19.67-16.15-15.22-13.96
Current Account (in % of GDP) -9.0-7.9-6.5-5.9-5.2

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

New Zealand's economy is based on agriculture and services such as tourism, retail, and wholesale trade. The agricultural sector is the largest industry in the country, with pastoral farming and horticulture being the most important categories. Agriculture represented 5.7% of GDP and 6% of the total workforce in 2022 (World Bank, 2023). Main agricultural products include dairy (the country is the 7th largest milk producer in the world in 2023), meat, wood, fruit (mainly peaches, plums, nectarines, drupe, cherries, apricots, and kiwi), vegetables, seafood, wheat, and barley. New Zealand also has a thriving wine industry and is rich in many natural resources, in particular gas, oil and coal. On average, migrants make up 15% of the agricultural workforce in New Zealand.

Industry represented 20.4% of GDP and 19% of the workforce in 2022 (World Bank, 2023). Main industries include log and wood articles, food processing, manufacturing, mining, transportation equipment, construction, aluminium production, and paper products. Prefabricated homes figure to factor strongly in New Zealand's housing and urban development programme.

The services sector represented 65.6% of GDP and employed 75% of the population in 2022 (World Bank, 2023). Main services include financial services, real estate services, and tourism - which is one of the most important sources of foreign currency. Other important sectors include retail and wholesale trade, restaurants and hotels.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 6.1 20.0 73.9
Value Added (in % of GDP) 5.7 19.7 66.7
Value Added (Annual % Change) -0.5 3.9 5.9

Source: World Bank - Latest available data.

 

Find more information about your business sector on our service Market Reports.

 
 
Monetary Indicators 20162017201820192020
New Zealand Dollar (NZD) - Average Annual Exchange Rate For 1 MUR 0.040.040.040.040.04

Source: World Bank - Latest available data.

 
 

Find out all the exchange rates daily on our service Currency Converter.

Indicator of Economic Freedom

Definition:

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). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
83,9/100
World Rank:
2
Regional Rank:
2

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

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. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
8.04/10
World Rank:
12/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Foreign trade is an essential element of New Zealand's economy, which is one of the most open economies in the world. Trade represented 49% of GDP in 2021 (World Bank, 2023). In 2022, the main export goods of the country were milk and dairy products (25.5% of all exports), meat (6%), wood (4.9%), fruits (3.7%), while the main imported commodities include Petroleum oils and oils obtained from bituminous (9.6%), Motor cars and other motor vehicles principally (7.8%), Telephone sets, incl. telephones for cellular (2.5%), Motor vehicles for the transport of goods (2.5%) and Automatic data-processing machines and units (2.0%).

New Zealand's biggest partners are China (28.2% of all exports in 2022), Australia (12%), the United States (10.9%), Japan, and South Korea. China was also the main supplier of goods and services of the country (23.2% of all imports in 2022), with Australia (11.1%), the United States (9%) and Japan (6.2%).The country is a founding member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). A Regional Comprehensive Economic Partnership (RCEP) - the world’s largest trade agreement - was also signed in 2020 which includes 7 of New Zealand top 10 trading partners and 16 countries in total: Australia, Brunei, Cambodia, China, India, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea, Thailand and Vietnam, and could eventually replace the CPTPP.  Additionally, the government is currently seeking trade deals with the EU and the UK.

Exports in New Zealand rose 13% year-on-year to a record high of 6.1 billion NZD in December 2021, boosted by sales of dairy products (Statistics New Zealand, 2022). In 2021, merchandise exports increased from 38.91 billion USD in 2020 to 44.75 billion USD, and imports increased from 37.15 billion USD in 2020 to 49.85 billion USD. The trade balance (including services) went from a positive territory in 2020 (+2.44 billion USD) to a deficit of 8.08 billion USD in 2021.

 
Foreign Trade Indicators 20182019202020212022
Imports of Goods (million USD) 43,79342,36337,15249,85554,219
Exports of Goods (million USD) 39,67339,51738,37744,77745,102
Imports of Services (million USD) 14,95815,56811,43013,67016,845
Exports of Services (million USD) 17,75517,41711,5799,82711,454
Imports of Goods and Services (Annual % Change) 3.91.0-15.917.3n/a
Exports of Goods and Services (Annual % Change) 2.8-0.2-17.61.4n/a
Imports of Goods and Services (in % of GDP) 27.927.122.226.0n/a
Exports of Goods and Services (in % of GDP) 27.927.321.722.2n/a
Trade Balance (million USD) -3,523-2,4371,478-4,133-7,750
Trade Balance (Including Service) (million USD) -1631932,054-8,061-13,865
Foreign Trade (in % of GDP) 55.854.444.048.2n/a

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2022
China 28.0%
Australia 12.1%
United States 10.8%
Japan 5.8%
South Korea 3.7%
See More Countries 39.6%
Main Suppliers
(% of Imports)
2022
China 23.1%
Australia 11.1%
United States 8.9%
South Korea 6.4%
Japan 6.3%
See More Countries 44.3%

Source: Comtrade, Latest Available Data

 
 

Main Products

45.6 bn USD of products exported in 2022
Milk and cream, concentrated or containing added...Milk and cream, concentrated or containing added sugar or other sweetening matter 15.0%
Butter, incl. dehydrated butter and ghee, and...Butter, incl. dehydrated butter and ghee, and other fats and oils derived from milk; dairy spreads 6.2%
Meat of sheep or goats, fresh, chilled or frozenMeat of sheep or goats, fresh, chilled or frozen 6.0%
Meat of bovine animals, frozenMeat of bovine animals, frozen 5.9%
Wood in the rough, whether or not stripped of bark...Wood in the rough, whether or not stripped of bark or sapwood, or roughly squared (excl. rough-cut wood for walking sticks, umbrellas, tool shafts and the like; wood in the form of railway sleepers; wood cut into boards or beams, etc.) 4.9%
See More Products 62.0%
54.9 bn USD of products imported in 2022
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 10.0%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 7.8%
Motor vehicles for the transport of goods, incl....Motor vehicles for the transport of goods, incl. chassis with engine and cab 2.5%
Telephone sets, incl. telephones for cellular...Telephone sets, incl. telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, incl. apparatus for communication in a wired or wireless network [such as a local or wide area network]; parts thereof (excl. than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528) 2.5%
Automatic data-processing machines and units...Automatic data-processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, n.e.s. 2.0%
See More Products 75.2%

Source: Comtrade, Latest Available Data

 
 

To go further, check out our service Import Export Flows.

 
 

Main Services

Source: United Nations Statistics Division, Latest Available Data

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Sources of General Economic Information

Ministries
Ministry of Economic Development
Ministry of Business, Innovation and Employment
Ministry of Foreign Affairs and Trade
Statistical Office
The New Zealand Statistics
Central Bank
Reserve Bank of New Zealand
Stock Exchange
New Zealand Stock Exchange
Search Engines
Yahoo! New Zealand
Searchnz
Acess NZ
Bing
Economic Portals
Statisphere

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Political Outline

Current Political Leaders
Queen: Charles III (since 8 September 2022)
Governor-General: Cindy Kiro (since 21 September 2021) 
Prime Minister: Christopher John Hipkins (since 25 January 2023)
Next Election Dates
General elections: on or before 13 January 2024
Main Political Parties
New Zealand has a multi-party system and the main political parties are:

- National Party: centre-right, conservative, liberal
- Labour Party: centre-left, social-democratic, social equality and universal rights

Other parties include:

- Green Party: left-wing, social-democratic
- New Zealand First: centre, conservative, nationalist, populist
- Maori Party: centre-left, maori rights
- ACT: right-wing, liberal

Type of State
Parliamentary democracy and Constitutional monarchy within the Commonwealth.
Executive Power
The head of State is the British sovereign represented by the Governor General. The head of Government is the Prime Minister, who is responsible for the legislature and is also the person who appoints the Governor General. The Cabinet is the most senior policy-making body and is led by the Prime Minister - who is the parliamentary leader of the governing party or coalition. The Prime Minister holds executive powers, which include the implementation of the law and running the day-to-day affairs of the country.
Legislative Power
The legislative authority is vested in a unicameral, 120-member House of Representatives. 72 members are directly elected by popular vote in single-member constituencies. These include seven Maori seats and 49 proportional seats chosen from party lists under the Mixt Member Proportional (MMP) system. The other seats are assigned to list Members of Parliament based on each party's share of the total party vote. All members serve three-year terms.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
8/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of New Zealand, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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Latest Update: November 2023