The Polynesian Maori reached New Zealand in about A.D. 800. In 1840, their chieftains entered into a compact with Britain, the Treaty of Waitangi, in which they ceded sovereignty to Queen Victoria while retaining territorial rights. That same year, the British began the first organized colonial settlement. A series of land wars between 1843 and 1872 ended with the defeat of the native peoples. The British colony of New Zealand became an independent dominion in 1907 and supported the UK militarily in both world wars. New Zealand's full participation in a number of defense alliances lapsed by the 1980s. In recent years, the government has sought to address longstanding Maori grievances. New Zealand assumed a nonpermanent seat on the UN Security Council for the 2015-16 term.
Oceania, islands in the South Pacific Ocean, southeast of Australia
natural gas, iron ore, sand, coal, timber, hydropower, gold, limestone
Population - distribution
English (de facto official) 89.8%, Maori (de jure official) 3.5%, Samoan 2%, Hindi 1.6%, French 1.2%, Northern Chinese 1.2%, Yue 1%, other or not stated 20.5%, New Zealand Sign Language (de jure official)
Auckland 1.344 million; WELLINGTON (capital) 383,000 (2015)
- Conventional long form
- Conventional short form
- New Zealand
- Local long form
- Local short form
parliamentary democracy (New Zealand Parliament) under a constitutional monarchy; a Commonwealth realm
- Geographic coordinates
- 41 18 S, 174 47 E
- Time difference
- UTC+12 (17 hours ahead of Washington, DC, during Standard Time)
- Daylight saving time
- +1hr, begins last Sunday in September; ends first Sunday in April
accepts compulsory ICJ jurisdiction with reservations; accepts ICCt jurisdiction
Over the past 40 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 some at the bottom of the ladder and broadened and deepened the technological capabilities of the industrial sector.
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ -5,152,234,056
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 47,670,984,501
- Exports of goods and services
- US$ 48,915,776,077
- Total Merchandise Trade
- FDI, net inflows
- US$ 1,526,636,550
- Commercial Service Exports
- US$ 14,835,896,171
dairy products, sheep, beef, poultry, fruit, vegetables, wine, seafood, wheat and barley
agriculture, forestry, fishing, logs and wood articles, manufacturing, mining, construction, financial services, real estate services, tourism
- dairy products, meat and edible offal, logs and wood articles, fruit, crude oil, wine
- China 17.6%, Australia 16.9%, US 11.8%, Japan 6% (2015)
- petroleum and products, mechanical machinery, vehicles and parts, electrical machinery, textiles
- China 19.5%, Australia 11.9%, US 11.7%, Japan 6.6%, Germany 4.7%, Thailand 4.1% (2015)
- Country Risk Rating
- The political and economic situation is good. A basically stable and efficient business environment nonetheless leaves room for improvement. Corporate default probability is low on average.
- Business Climate Rating
- The business environment is very good. Corporate financial information is available and reliable. Debt collection is efficient. Institutional quality is very good. Intercompany transactions run smoothly in environments rated A1.
- Proximity to Asia and Australia
- Touristic appeal and large agricultural sector
- Public debt under control
- Dynamic demographics
- Economy reliant on foreign investments
- High levels of household and corporate debt (especially in the agricultural sector)
- Dependence on Chinese demand
- Shortage of skilled labor
Growth in 2017 is expected to remain consistent, at a similar level to 2016, despite slowing growth in China (its leading trading partner) which will nevertheless impact on the economy. Activity will be sustained by domestic demand, encouraged by a more relaxed monetary policy and low unemployment (4.9% in September 2016). The cut in policy rate by the central bank as well as the strong increase in immigration will drive household consumption. The rise in property prices will also bolster private consumption, but the high level of household debt (165% of gross disposable income) represents a risk for the stability of the banking system.
The construction sector will be underpinned by residential property investment and the continuation of the reconstruction projects following the earthquakes of 2011 and 2016. Investment in the agricultural sector is expected to pick up in 2017 with a gradual increase in product prices and improved productivity. The dairy (a quarter of exports) and fruit (apples and kiwi) sectors, together with the wood segment, will perform better. However, farmers are heavily indebted as a result of the losses incurred because of low prices (in particular milk), making them more vulnerable to possible shocks (drought, earthquakes). The increased demand from the United States and Australia for these products however will help partly offset the slowdown in demand from China.
Inflation is likely to rise, closing with the central bank’s target rate (2%). This rise reflects increased domestic demand, the gradual recovery in oil and gas prices and the stabilization of the exchange rate. The central bank (RBNZ) cut its policy rates by 100 base points between October 2015 and November 2016 (from 2.75% to 1.75%), and is expected to continue its monetary policy easing in 2017 in order to boost domestic demand.
The authorities do also have a certain amount of room for maneuver with the budget (low debt and small deficit) to boost activity if needed.
The budget deficit should continue to contract and near equilibrium. The restoration of budget surpluses is a priority objective of the government in so far as the country is mainly indebted to non-residents and is facing an ever-increasing hole in its social security system (ageing population). At the same time, the public debt is likely to decline further, even though already at a very low level compared to other OECD countries.
The current account balance, with a structural deficit because of the income balance deficit, is expected to worsen slightly in 2017. The growth in exports (in particular agricultural products) will not completely offset that in imports, boosted by strong domestic demand.
In addition, the Trans-Pacific Partnership (TPP) agreement, signed in October 2015, is set to be called into question following the election of Donald Trump, who is against ratification of the agreement, as President of the United States. Another multilateral agreement (the Regional Comprehensive Economic Partnership (RCEP)) is currently in negotiation and includes among others China, India, Japan and South Korea. This new agreement could substitute for the TPP by creating new opportunities for the country, in particular in the agriculture and dairy sector. The signing of the agreement could thus enable the country to increase the contribution of exports to the GDP to 40% by 2025, compared with 30% in 2016, as hoped by the authorities.
The New Zealand banking sector is fairly well capitalized, even if the low household savings rate (3%) forces the banks to borrow on the financial markets and thus be exposed to the volatility of these. The sector is highly concentrated and dominated by just four banks, which, together with a high level of debt among households and farmers, is also a source of vulnerability.
John Key, Prime Minister since 2008, announced his resignation on 5 December 2016, one year before the end of his term. The leader of the National Party, expected to run for a fourth term, cited family reasons for leaving. His successor, Bill English, will benefit from a favorable economic context before the November 2017 General Election.
The business climate is extremely positive and the country was in first place (out of 190 countries) in the most recent Doing Business survey by the World Bank. It is in the lead in particular for the ease of setting up a business, obtaining credit and the protection for minority investors.