New Zealand has an open economy that works on free market principles.
Over the last 30 years our economy has gone from being one of the most regulated in the OECD to one of the least regulated, most free-market based economies.
Fertile soil and excellent growing conditions coupled with sophisticated farming methods and advanced agricultural technology provide the ideal environment for pastoral, forestry and horticulture activities. Various primary commodities account for around half of all goods exports and New Zealand is one of the top five dairy exporters in the world.
New Zealand has a very export-driven competitive economy with exports accounting for about 30% of GDP
Complementing primary production are sizeable manufacturing and service sectors and growing high-tech capabilities. Tourism, film production, and winemaking are also significant.
It's an outward-looking, internationally competitive economy with exports accounting for about 30% of GDP.
We have a low-inflation environment, with monetary policy managed by the Reserve Bank, our independent central bank that is charged with maintaining price stability.
We have a long-standing flexible exchange rate. There are no exchange controls or restrictions on bringing in or repatriating funds.
Projecting economic growth of around 3% for 2018, the OECD comments that while export growth is expected to slow, overall growth “will continue to be driven by strong tourism demand from Asia and increases in dairy exports.”
The New Zealand economy made a solid recovery after the 2008/09 recession, which was shallow compared to other advanced economies. Annual growth has averaged 2.1% since March 2010, emphasising the economy's resilience.
In the year ending September 2017 the economy grew 2.7%. Growth in the year was driven by construction, booming tourism, and strong terms of trade.
These forces proved to be considerably greater than anticipated and the Government is now forecasting average growth of 2.9% for 2018, and 3.6% for 2019.
Stock market performance
The New Zealand stock market rose 22% in 2017, buoyed by an economy growing at a rate above its long-term trend. GDP growth is expected to increase in calendar 2018, supported by high net migration, strong tourism growth, robust construction activity, and low interest rates.
Share prices, despite a strong rally since the global finanical crisis, remain underpinned by growing corporate earnings and attractive dividend yields.
Relative to long term interest rates, New Zealand equities continue to provide good value.
Main exports, key trading partners
New Zealand has a diversified export portfolio.
Our top ten trading partners in 2016 were, in order, Australia, China, the European Union, USA, Japan, Singapore, Korea, Thailand, Malaysia and India. The government is pursuing further opportunities in Europe and also in emerging regions including the Middle East and Latin America.
While we export a wide and growing range of products, commodity-based products remain a main source of export receipts. This area is diversifying as our exporters increasingly look to value-added products - for example, wine and ‘prepared foods’ have long supplanted wool as an export earner.