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Economic Overview

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 grew 2.4% in 2019 against 3.2% in 2018, but fell to -2.1% in 2020 due to the outbreak of the COVID-19. Nevertheless, growth came back to +5.1% in 2021 and is expected to remain at 3.3% in 2022 before decreasing to 1.7% in 2023 according to the updated IMF forecasts from October 2021. 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 -5.4% of GDP in 2020 and -7.6% in 2021 and is expected to be reduced to -6.5% and then -3.3% in 2022 and 2023 respectively. Due to the pandemic, the national debt increased sharply from 43.6% of GDP in 2020 to 52% of GDP in 2021. It is projected to increase again in 2022 to 56.9% and in 2023 at 58.5%. The inflation rate remained low in 2020 at 1.7% but increased to 3% in 2021 and is expected to remain stable at 2.2 and 2% over the next two years according to the latest World Economic Outlook of the IMF (October 2021). Nevertheless, 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. As a result, private consumption grew modestly in 2021.

In 2022, the country’s most immediate challenge remains related to the economic, social and public health impacts of the COVID-19 pandemic. The unemployment rate increased from 4.2% in 2019 to 4.6% in 2020 and 4.3% in 2021 despite the negative economic impact of the COVID-19 pandemic. It is expected to reach 4.4% in 2022 and 4.7% in 2023. 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 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 210.44209.38e247.64267.64282.40
GDP (Constant Prices, Annual % Change) 2.4-2.15.13.31.7
GDP per Capita (USD) 42,21041,16548,34951,70753,796
General Government Balance (in % of GDP) -1.8-5.4e-7.6-6.5-3.3
General Government Gross Debt (in % of GDP) 32.043.6e52.056.958.5
Inflation Rate (%) 1.61.7e3.02.22.0
Unemployment Rate (% of the Labour Force) 4.24.64.34.44.7
Current Account (billions USD) -6.15-1.73-8.16-6.76-7.37
Current Account (in % of GDP) -2.9-0.8-3.3-2.5-2.6

Source: IMF – World Economic Outlook Database , October 2021

Note: (e) Estimated Data

Country Risk

See the country risk analysis provided by La Coface.

 

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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 7% of GDP and 6% of the total workforce in 2021 (World Bank). Main agricultural products include dairy (the country is the 9th largest milk producer in the world), 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 19% of GDP and 19% of the workforce in 2021 (World Bank, 2022). 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% of GDP and employed 75% of the population in 2021 (World Bank, 2022). 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) 5.8 19.3 74.9
Value Added (in % of GDP) 5.7 20.4 65.5
Value Added (Annual % Change) -3.2 1.2 2.0

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
New Zealand Dollar (NZD) - Average Annual Exchange Rate For 1 USD 1.441.411.451.501.54

Source: World Bank - Latest available data.

 

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Foreign Trade

Foreign trade is an essential element of New Zealand's economy, which is one of the most open economies in the world. Trade represented 44.3% of GDP in 2020. In 2021, the main export goods of the country were milk and dairy products (27% of all exports), meat (14%), wood (7.5%), fruits (6.6%), while the main imported commodities include Machinery and boilers (14%), cars and other vehicles other than railway and tramway (11%), Electrical and electronic equipment (9.3%) and mineral fuels, oils, distillation products (8.5%).

New Zealand's biggest partners are China (29% of all exports in 2020), Australia (14%), the United States (12%), Japan, and South Korea. China was also the main supplier of goods and services of the country (23% of all imports in 2020).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 2020, merchandise exports slightly decreased at USD 38.91 billion, and imports decreased from 42.3 billion USD in 2019 to 37.15 billion USD. The trade balance (excluding services) reached + 2 billion USD from a deficit of 2.41 billion USD in 2019.

 
Foreign Trade Values 20162017201820192020
Imports of Goods (million USD) 36,06740,12543,79342,36337,152
Exports of Goods (million USD) 33,69938,07539,67339,51738,919
Imports of Services (million USD) 11,96712,80414,82015,50311,100
Exports of Services (million USD) 14,88615,99717,52717,23611,580

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20162017201820192020
Foreign Trade (in % of GDP) 52.353.955.554.1n/a
Trade Balance (million USD) -1,881-1,503-3,523-2,4152,004
Trade Balance (Including Service) (million USD) 1,3791,817-678-5912,569
Imports of Goods and Services (Annual % Change) 5.27.23.91.0n/a
Exports of Goods and Services (Annual % Change) 1.63.62.8-0.2n/a
Imports of Goods and Services (in % of GDP) 25.826.627.927.1n/a
Exports of Goods and Services (in % of GDP) 26.527.327.627.0n/a

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20212022 (e)2023 (e)2024 (e)2025 (e)
Volume of exports of goods and services (Annual % change) -2.17.211.56.63.4
Volume of imports of goods and services (Annual % change) 6.66.79.33.16.0

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
New Zealand has signed a free trade agreement (CEPA) with Hong Kong.
 

Main Partner Countries

Main Customers
(% of Exports)
2020
China 27.8%
Australia 13.6%
United States 11.0%
Japan 5.9%
South Korea 2.9%
See More Countries 38.8%
Main Suppliers
(% of Imports)
2020
China 22.6%
Australia 12.1%
United States 9.7%
Japan 5.7%
South Korea 4.9%
See More Countries 45.1%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
Queen: Elizabeth II (since 6 February 1952)
Governor-General: Cindy Kiro (since 21 September 2021) 
Prime Minister: Jacinda Ardern (since 26 October 2017)
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

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. 71 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. All members serve three-year terms.
 

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COVID-19 Country Response

COVID-19 epidemic evolution
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 COVID-19 - current cases webpage with the official data.

For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures

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.

Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.

The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
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 Exporting during the COVID-19 emergency and New Zealand Customs Tariff Concessions website.

For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to New Zealand on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
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 COVID-19 economic response webpages.

For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and  macroeconomic) taken by the New Zealand government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to New Zealand in the IMF’s Policy Tracker platform.
Support plan for businesses
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 Businesses and services  section of the New Zealand government’s Unite Against COVID-19 website. And also refer to the COVID-19: Information for businesses webpages.

For a general overview of international SME support policy responses to the COVID-19 outbreak 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.
Support plan for exporters

The New Zealand Export Credit program remains in full force. The government has a website COVID-19 / Coronavirus Information for Exporters.

 

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