ECONOMIC DETAILS OF NEW ZEALAND

 In the past six years New Zealand has enjoyed economic growth above the rate of other trading partners. There has been significant decline in poverty level and lowest crime rate has been recorded. Unemployment has been reduced to the lowest rate in the OECD and solid progress is being made to eliminate child poverty.

The strong economic growth has seen the emergence of significant skill shortages in key sectors of the economy. Since growth has been led by domestic demand, especially fuelled by bank lending based on offshore borrowing, New Zealand’s dollar has been at high levels for much longer period since the dollar was floated, which in turn has increased consumption and inflationary pressures. This has increased the need for tighter monitory policy.

The most effective contribution that the government can make to improving economic performances is to place greater emphasis on the importance of saving, productivity, education and skills, science and innovation, and export growth. The security of New Zealand’s economy in the 21st century will come from the ability of its firms to be part of high skill, high productivity, and high wage economy. Particular attention will be paid on productivity growth, which will require the review of the structure of corporate taxation. A multi-year funding path for research, science and technology will be developed. The government intends to identify key areas of national research and then set out to maintain and develop long-term capability.

The government is preparing 2007 to be a specially designated “Export year”. The work of New Zealand Trade and Enterprise will be refocused more on exporting, especially of higher value goods and services, with stronger presence in key off shore markets. The backbone of New Zealand’s economy will be primary industries. Responsibility for the agriculture, forestry and fishing will be ensured so that these sectors lead the way in improving productivity and innovation.

New Zealand’s growing economy relies on strong foundations, including world class education, infrastructure health care and social services. The government has prioritized to lift up living standards for families. The government is also committed to provide additional targeted tax relief to many families with children, as well as additional support to child care. The main sources of recent growth to the economy have been household spending and business investment. Growth in export earnings also has been fairly modest. A large proportion of the risks and uncertainties around the outlook for New Zealand economy revolve around domestic or New Zealand specific factors.