Financial and Economic Overview of Newzealand
-
Upload
taapon-mahfuz-e-rabbani -
Category
Documents
-
view
220 -
download
0
Transcript of Financial and Economic Overview of Newzealand
-
8/11/2019 Financial and Economic Overview of Newzealand
1/52
ISSN: 1173-2334 (Prin)
ISSN: 1178-749X (Online)
NEW ZEALANDEconomic and Financial
Overview 2013
Head of Lake ekapo and the Godley Valley.
Andris Apse
-
8/11/2019 Financial and Economic Overview of Newzealand
2/52
2
Te Waitaki River, Mackenzie Country. Hydro lakes, Waitaki and Aviemore in background.Andris Apse
Te Waitaiki Riveris a large braided river in he Mackenzie Basin in he cenre o he Souh Island. I rises in he Souhern Alps and flows hrough Lakes
Benmore, Aviemore and Waiaki, which, ogeher wih oher lakes in he area, orm par o he Waiaki hydro scheme.
Te Mackenzie Basin, more commonly known as he Mackenzie Country, is a large ellipical monane basin amous or is sheep arming. Te area
was named or James Mackenzie, a shepherd and sheep hie o Scoish descen who has become an enduring olk hero. Mackenzie herded his solen
flocks in an area hen almos compleely devoid o human habiaion. Afer his capure in 1855, he area was divided up ino large sheep saions
(pasoral arms).
Owing o is sill sparse populaion and sunning scenery, he Mackenzie Counry is requenly used or film locaions, including much o
Sir Peer Jacksons Lord o he Rings rilogy and Te Hobbi movies.
-
8/11/2019 Financial and Economic Overview of Newzealand
3/52
3
5 New Zealand: An Overview
5 Area and Populaion
5 Form o Governmen
6 Social Framework
6 Te reay o Waiangi
6 Foreign Relaions and Exernal rade
7 Environmenal Policy
8 Seleced Economic and Financial Daa
9 Economy
9 Inroducion
9 Recen Economic Perormance and Oulook
11 Moneary Policy11 Fiscal Policy
12 Public Deb
13 Naional Accouns
15 Prices and Coss
16 Labour Markes
17 Indusrial Srucure and Principal Economic Secors
17 Primary Indusries
19 Manuacuring
20 Service Indusries
23 Exernal Secor
23 Exernal rade
25 Composiion o Merchandise Expors and Impors
26 Geographic Disribuion o Exernal rade
28 Principal rading Parners
29 Foreign Invesmen Policy
29 Balance o Paymens
31 Foreign-Exchange Raes
32 Overseas Reserves
33 Banking and Business Environmen
33 Supervision o he Financial Secor
34 Business Law Environmen
37 Moneary Policy
38 Ineres Raes and Money and Credi Aggregaes39 Public Finance and Fiscal Policy
39 Public Finance
41 Curren Fiscal Posiion and 2012 Budge
42 axaion
45 Governmen Enerprises
45 Sae-Owned Enerprises and Crown Eniies
45 Parial Sale o Seleced SOEs
45 Crown Eniies
45 Perormance o Governmen Enerprises
49 Public Deb
49 Deb Managemen Objecives
49 Deb Record
50 Summary o Direc Public Deb
Further information
Unless otherwise specified, all monetary
units in this Overview are New Zealand
dollars. Te mid-point rate on 31 January
2013 was NZ$1 = US$0.8359.
Te fiscal year of the Government of
New Zealand ends on 30 June.
Spelling and punctuation conform to
usage in New Zealand and have not
been adjusted to conform to usage in the
United States or any particular external
market.
Where figures in tables have been
rounded, totals listed may not equal the
sum of the figures.
In tables, NA = Not Available.
CONENS
-
8/11/2019 Financial and Economic Overview of Newzealand
4/52
4
NEW ZEALAND
WHANGAREI
AUCKLAND
HAMILON
ROORUA
AURANGA
AUPO
CHRISCHURCH
IMARU
OAMARU
INVERCARGILL
QUEENSOWN
DUNEDIN
GISBOURNE
NAPIERHASINGS
NEW P LYMOUH
WHANGANUI
PALMERSONNORH
MASERON
WELLINGON
BLENHEIM
NELSON
GREYMOUH
-
8/11/2019 Financial and Economic Overview of Newzealand
5/52
5
Area and PopulationNew Zealand is a parliamenary democracy siuaed in he Souh
Pacific Ocean, 6,500 kilomeres (4,000 miles) souh-souhwes o
Hawaii and 1,900 kilomeres (1,200 miles) o he eas o Ausralia.
Wih a land area o 268,000 square kilomeres (103,000 square
miles), i is similar in size o Japan or Briain. I is comprised o wo
main adjacen islands, he Norh Island and Souh Island, and a
number o small oulying islands. Because hese islands are widely
dispersed, New Zealand has a relaively large exclusive mariime
economic zone o 4.1 million square kilomeres.
Over hal o New Zealands oal land area is pasure and
arable land and more han a quarer is under ores cover,including 1.7 million hecares o planed producion ores. I is
predominanly mounainous and hilly, wih 13% o he oal area
consising o alpine errain, including many peaks exceeding 3,000
meres (9,800 ee). Lakes and rivers cover 1% o he land. Mos o
he rivers are swif and seldom navigable, bu many are valuable
sources o hydro-elecric power. Te climae is emperae and
relaively mild.
New Zealands residen populaion a 30 June 2012 is esimaed
a 4,433,100. Wih an esimaed populaion o 1,486,000 people,
he Greaer Auckland Region is home o 33 ou o every 100
New Zealanders and is one o he ases growing regions in he
counry.
New Zealand has a highly urbanised populaion wih around 72%
o he residen populaion living in urban eniies wih 30,000 or
more people. As a June 2010, over hal o all New Zealanders
(53%) lived in he our main urban areas o Auckland (1,354,900),
Hamilon (203,400), Wellingon (389,700) and Chrischurch
(390,300).
Te populaion is heavily concenraed in he norhern hal o he
Norh Island (52%), wih he remaining populaion airly evenly
spread beween he souhern hal o he Norh Island (24%) and
he Souh Island (24%).
Form of GovernmentNew Zealand is a sovereign sae wih a democraic parliamenary
governmen based on he Wesminser sysem. Is consiuional
hisory daes back o he signing o he reay o Waiangi in
1840, when he indigenous Mori people ceded sovereigny over
New Zealand o he Briish Queen. Te New Zealand Consiuion
Ac 1852 provided or he esablishmen o a Parliamen wih
an eleced House o Represenaives. Universal suffrage was
inroduced in 1893. Like Canada and Ausralia, New Zealand
has he Briish monarch as iular Head o Sae. Te Queen is
represened in New Zealand by he Governor-General, appoined
by her on he advice o he New Zealand Governmen.
As in he Unied Kingdom, consiuional pracice in New Zealand
is an accumulaion o convenion, preceden and radiion, and
here is no single documen ha can be ermed he New Zealand
consiuion. Te Consiuion Ac 1986, however, updaed,
clarified and brough ogeher in one piece o legislaion he mos
imporan consiuional provisions ha had been enaced in
various saues. I provides or a legislaive body, an execuive and
adminisraive srucure and specific proecion or he judiciary.
Legislaive power is vesed in Parliamen, a unicameral body
designaed he House o Represenaives. I currenly has 121
members, who are eleced or hree-year erms hrough general
elecions a which all residens over 18 years o age are eniled o
voe. Auhoriy or raising revenue by axaion and or expendiure
o public money mus be graned by Parliamen. Parliamen also
conrols he Governmen by is power o pass a resoluion o no
confidence or o rejec a governmen proposal made a maer o
confidence, in which even he Governmen would be expeced
o resign.
Te execuive Governmen o New Zealand is carried ou by he
Execuive Council. Tis is a ormal body made up o he Cabine
and he Governor-General, who acs on he Cabines advice. Te
Cabine isel consiss o he Prime Miniser and his/her Minisers,
who mus be chosen rom among eleced Members o Parliamen.
Each Miniser supervises and is responsible or paricular areas
o governmen adminisraion. Collecively, he Cabine is
responsible or all decisions o he Governmen.
New Zealand: An Over v iew
-
8/11/2019 Financial and Economic Overview of Newzealand
6/52
6
NEW ZEALAND: AN OVERVIEW
As a resul o a reerendum held in conjuncion wih he 1993
elecion, New Zealand changed rom a Firs Pas he Pos (FPP)
sysem o elecing Members o Parliamen o a Mixed Member
Proporional (MMP) sysem o proporional represenaion.
MMP is similar o he German Federal sysem o elecion o he
Lower House. Under MMP, he oal number o seas each pary
has in Parliamen is proporional o ha parys share o he oal
lis voe. Around hal o all Members o Parliamen are eleced
direcly as elecorae represenaives as under he FPP sysem. Te
remaining members are chosen by he paries rom pary liss. Tis
change was pu in place or he 1996 elecion.
A reerendum on he uure o MMP was held in conjuncion wih
he 2011 elecion. A majoriy o responses avoured he reenion
o MMP. An independen review o how MMP operaes was
held during 2012. Te Governmen is currenly considering is
response o he review recommendaions.
Following he general elecion in November 2011, eigh poliical
paries are represened in Parliamen. Te oal number o seas
sands a 121, an "overhang" o one sea, because he Mori Pary
won one more elecoral sea han i was eniled o according o
is share o he pary voe overall. Te Naional Pary ormed a
minoriy Coaliion Governmen afer he elecion wih suppor
agreemens wih AC, Unied Fuure and he Mori Pary. Te
Honourable John Key, he Leader o he Naional Pary, is Prime
Miniser and he Honourable Bill English, Depuy Leader o
Naional, is Depuy Prime Miniser.
Te judicial sysem in New Zealand is based on he Briish model.
By convenion and he Consiuion Ac 1986, he judiciary is
independen rom he execuive.
Social Framework
New Zealand has a high degree o social and poliical sabiliy
and a modern social welare sysem which includes universal
enilemen o primary and secondary educaion and subsidised
access o healh services or all residens. Te populaion is mainly
European wih around 77% o residens designaing hemselves
as being o European descen, 15% as New Zealand Mori, 7%
as Pacific Islanders, 10% as Asian and 1% as oher. (Noe: Census
respondens are able o give muliple responses o ehniciy
quesions, hence he number o responses is greaer han he oal
populaion.) Tere is a high incidence o inermarriage among
hese groups. Te majoriy o Europeans are o Briish descen,
while he New Zealand Mori are o he same ehnic origin as
he indigenous populaions o ahii, Hawaii and several oher
Pacific Islands. In recen years here has been an increasing level o
immigraion rom Asian counries.
Te reaty of Waitangi
Te reay o Waiangi is regarded as a ounding documen o
New Zealand. Firs signed a Waiangi on 6 February 1840, he
reay is an agreemen beween Mori and he Briish Crown
and affirms or Mori heir saus as he indigenous people o
New Zealand.
Te reay comprises hree aricles. Te firs grans o he Queen
o England he righ o govern New Zealand while he second
aricle guaranees Mori possession o heir lands, oress, fisheries
and oher resources. Te hird and final aricle gives Mori all he
ciizenship righs o Briish subjecs. Tere are ousanding claims
by Mori ha he Crown has breached he reay, paricularly he
guaranees under he second aricle. Since 1992, he Governmen
has developed processes and policies o enable he Crown and
Mori o sele any reay o Waiangi claim relaing o evens
beore Sepember 1992.
Foreign Relations and External rade
New Zealand oreign policy seeks o influence he inernaional
environmen o promoe New Zealands ineress and values,
and o conribue o a sable, peaceul and prosperous world.In seeking o make is voice heard abroad, New Zealand aims o
advance and proec boh is securiy and prosperiy ineress.
New Zealand is a long-sanding member o he Organisaion
or Economic Cooperaion and Developmen (OECD), he
Inernaional Moneary Fund (IMF), he World Bank Group,
he Asian Developmen Bank (ADB) and he World rade
Organisaion (WO).
rade is essenial o New Zealands economic prosperiy. Expors
o goods and services make up over 30% o New Zealands gross
domesic produc (GDP). New Zealands rade ineress are well
diversified. Ausralia, China, Norh America, he European Unionand he Associaion o Souh-Eas Asian Naions (ASEAN) ake
beween around 10% and 25% each o New Zealands goods
expors. Oher major rading parners include Japan and Korea.
able 1 Disribuion o Seas in Parliamen Among Principal Paries Over he Las Six General Elecions
1996 1999 2002 2005 2008 2011
Naional Pary 44 39 27 48 58 59
Labour Pary 37 49 52 50 43 34
Green Pary - 7 9 6 9 14
New Zealand Firs 17 5 13 7 - 8
M ori Pary - - - 4 5 3
AC New Zealand 8 9 9 2 5 1
Unied Fuure 1 1 8 3 1 1Mana Pary N/A N/A N/A N/A N/A 1
Oher 13 10 2 1 1 -
otal 120 120 120 121 122 121
Source: Elecoral Commission
-
8/11/2019 Financial and Economic Overview of Newzealand
7/52
NEW ZEALAND: AN OVERVIEW
7
While New Zealand expors a broad range o producs, i is relian
on expors o commodiy-based producs as he main source o
expor receips and relies on impors o raw maerials and capial
equipmen or indusry.
New Zealand is commied o a muli-rack rade policy which
includes he ollowing measures:
mulilaeral rade liberalisaion hrough he WO;
regional cooperaion and liberalisaion hrough acive
membership o such ora as he Asia Pacific Economic
Cooperaion (APEC) and he Eas Asian Summi;
a ocus on building regional relaionships hrough various
policy iniiaives; and
bilaeral and plurilaeral rade arrangemens, such as:
he Closer Economic Relaions (CER) agreemen wih
Ausralia (enered ino orce in 1983);
bilaeral agreemens wih Singapore, Tailand, China,
Malaysia and Hong Kong;
he rans-Pacific Sraegic Economic Parnership Agreemen
(previously known as P4) wih Singapore, Chile and Brunei;
he ASEAN-Ausralia-New Zealand Free rade Agreemen;
he recenly concluded New-Zealand Gul Cooperaion
Council (GCC) Free rade Agreemen;
curren negoiaions wih Korea, India, Chinese aipei and
he cusoms union o Russia, Kazakhsan and Belarus;
curren rans-Pacific Parnership (PP) negoiaionso include he Unied Saes, Ausralia, Peru, Vienam,
Malaysia, Canada, Mexico and he original P4 counries;
he PACER (Pacific Agreemen on Closer Economic
Relaions) Plus negoiaions, wih a ocus on economic
developmen wihin he Pacific; and
curren negoiaions on RCEP (Regional Comprehensive
Economic Parnership) which involve he en members o
ASEAN, China, India, Korea, Japan and Ausralia.
New Zealand remains commied o a reducion o world-wide
rade barriers. ariffs have been sysemaically reduced and
quaniaive conrols on impored goods eliminaed. Around 90%
o goods come ino New Zealand ariff ree, including all goods
rom Leas Developed Counries.
New Zealand was acive in laying he oundaions or he Doha
round o WO negoiaions. Agriculure and services are o
prime imporance o he New Zealand economy and agriculure,
in paricular, is cenral o he Doha negoiaions. New Zealand is
working wih oher like-minded counries o reduce barriers o
rade in goods and services and provide improved marke access
or New Zealand exporers.
New Zealand, as a member o APEC, is commied o achieving
APECs goals o ree rade and invesmen in he region. Asia-
Pacific regional linkages remain a he core o New Zealands
poliical and economic ineress. Te counries o APEC ake more
han 70% o New Zealands expors, provide 71% o ourism
arrivals and accoun or around 75% o New Zealands oreign
direc invesmen.
Environmental Policy
Te New Zealand Governmen recognises he imporance o
is environmen and naural resources o social and economic
developmen.
New Zealand is wealhy in naural resources. I has pleniul, clean
waer; clean air; erile soil and a emperae climae well-suied o
oresry, livesock and agriculure; long coaslines and significan
aquaculure resources; low energy use, wase and greenhouse
gas emissions per uni o economic oupu; significan mineral
and peroleum reserves; and exraordinary biodiversiy boh
on land and in is waer bodies. Te World Bank esimaes ha
New Zealand ranks eighh ou o 120 counries in naural capial
per capia; i is ouranked only by peroleum-exporing counries.1
Given he dependence o he economy on he primary secor,
beer managemen o reshwaer and oher renewable resources,
he coninued proecion o biodiversiy and marine resources,
reducing wase and improving energy efficiency are all essenial
or creaing wealh and providing higher living sandards or
New Zealanders. Programmes are in place or under urher
developmen in all hese areas.
Te Resource Managemen Ac 1991 (RMA) provides a
naional ramework or balancing environmenal proecion wih
economic, social and culural values. Local governmen has he
major responsibiliy or delivering resource managemen planning
and consening, wih cenral governmen providing guidance
on how o apply he RMA and direcion on maers o naional
imporance. Amendmens o he RMA in 2009 sreamlined and
simplified processes and creaed a new agency, he Environmenal
Proecion Auhoriy, o aciliae decision-making on proposals
o naional significance. Furher amendmens are planned or
inroducion in 2013. Tese will include changes o srenghen
planning oucomes, reduce uncerainy, reduce coss and delays
and enhance Mori paricipaion in resource managemenprocesses.
Climae change presens a paricular challenge or New Zealand,
boh rom an inernaional and domesic policy perspecive.
New Zealand is a small counry wih a unique emissions profile
driven by he predominance o land-use indusries. Despie
New Zealands relaively small conribuion o global emissions,
he Governmen is noneheless commied o paricipaing
consrucively in he inernaional climae change dialogue.
An Emissions rading Scheme (ES), inroduced in 2008, is
designed o assis New Zealand in meeing inernaional climae
change commimens a leas cos and o reduce New Zealandsne emissions below business-as-usual levels by placing obligaions
on emiers o surrender unis in relaion o heir emissions.
1 World Bank. Te Changing Wealh o Naions: Measuring Susainable Developmen in he New Millenium. (2011). Rerieved rom
hp://daa.worldbank.org/daa-caalog/wealh-o-naions
-
8/11/2019 Financial and Economic Overview of Newzealand
8/52
8
Selected Economic and Financial Data
able 2 Saisical Daa
2008 2009 2010 2011 2012(dollar amouns in millions)
GDP a Curren Prices1, 2 183,997 185,555 189,718 198,525 206,058
Annual % Increase (Decrease) in Real GDP1, 2, 3 2.5 (1.3) (1.3) 1.6 1.6
Populaion4 4,261 4,305 4,358 4,400 4,428
Unemploymen Rae5 4.2 6.5 6.4 6.6 7.3
Change in Consumer Price Index6 5.1 1.7 1.5 4.6 0.8
Exchange Rae7 0.7135 0.6739 0.7175 0.8327 0.8085
90-Day Bank Bill Rae8 8.20 2.77 3.22 2.83 2.65
10-Year Governmen Loan Sock Rae8 6.04 5.73 5.31 4.68 3.55
erms o rade Index 2, 9 1,242 1,074 1,210 1,296 1,208
Curren Accoun Defici as a % o GDP 2, 10 (8.6) (3.0) (3.2) (4.3) (4.7)
Source: Saisics New Zealand, RBNZ
able 3 Governmen Finance10
Year ended 30 June
2006/07 2007/08 2008/09 2009/10 2010/11 2011/1211
(dollar amouns in millions)
oal Revenue 74,589 81,479 79,928 74,725 81,563 83,637
oal Expenses 68,729 75,842 83,329 81,040 99,959 94,446
OBEGAL12 5,860 5,637 (3,893) (6,315) (18,369) (10,809)
Gains/(Losses) 2,162 (3,253) (6.612) 1,806 5,036 (1,792)
Operating Balance 8,022 2,384 (10,505) (4,509) (13,360) (12,601)
Operaing Balance % o GDP 4.7 1.3 (6.8) (2.4) (6.7) (6.0)
oal Asses 180,347 200,835 217,151 223,355 245,215 245,615
oal Liabiliies 83,520 95.321 117,636 128,367 164,328 177,333Net Worth 96,827 105,514 99,515 94.988 80,887 68,282
Ne Direc Domesic Borrowing (3,917) 1,721 8,454 8,016 18,362 -
Ne Direc Overseas Borrowing 312 (1,296) 717 409 787 -
Source: Te reasury
able 4 Direc Public Deb
Inernal Funded Deb 26,860.4 28,210.4 29,614.5 38,575.5 60,519.9 -
Inernal Floaing Deb 2,303.4 1,655.0 7,505.0 8,065.0 7,326.0 -
Exernal Deb 2,048.0 2,048.5 4,718.7 2,197.2 214.0 -
oal Direc Public Deb 31,211.4 31,913.9 41,298.2 48,837.7 68,059.9 -
Source: Te reasury
1 Year ended 31 March.
2 2012 daa provisional. Prior years daa revised.
3 Producion based chain volume series expressed in 1995/96 prices.
4 Sepember year residen populaion esimae.
5 Sepember quarer, seasonally adjused.
6 Annual percenage change, Sepember quarer.
7 US$ per NZ$ quarerly average or June.
8 June quarerly average.
9 Year ended 30 June. Base: June quarer 2002 = 1,000.
10 Year ended 30 June.
11 Financial Saemens o he Governmen o New Zealand or he Year Ended 30 June 2012.
12 Operaing Balance Excluding Gains and Losses. Te OBEGAL is he operaing balance excluding gains and losses on asses and liabiliies o insiuions such as he
Acciden Compensaion Corporaion, Earhquake Commission and he Governmen Superannuaion Fund.
NEW ZEALAND: AN OVERVIEW
-
8/11/2019 Financial and Economic Overview of Newzealand
9/52
9
IntroductionNew Zealand has a small, open economy ha operaes on ree
marke principles. I has sizeable manuacuring and service
secors complemening a highly efficien expor-oriened
agriculural secor. New Zealand is highly dependen on he
primary secor wih commodiies accouning or around hal o
oal goods expors. Expors o goods and services accoun or
around one-hird o real expendiure GDP.
New Zealands high proporion o winer sunshine hours and
considerable rainall provide an ideal resource base or pasoral
agriculure, oresry, horiculure and hydro-eleciciy generaion.
Hydro-elecriciy provides a relaively cheap source o energyand has allowed he developmen o energy-based indusries
such as aluminium refinemen. New Zealand is also a popular
overseas visior desinaion and ourism is an imporan source o
expor income.
Over he las quarer o a cenury, he New Zealand economy has
changed rom being one o he mos regulaed in he OECD o one
o he leas regulaed. Te minoriy Naional Pary Governmen
eleced in November 2008, and re-eleced in November 2011,
aims o lif he long-erm perormance o he economy hrough
six key policy drivers: a growh-enhancing ax sysem; beer
public services; suppor or science, innovaion and rade;
beer regulaion, including regulaion around naural resources;
invesmen in inrasrucure; and improved educaion and skills.
Recent Economic Performance and Outlook
Background
Te New Zealand economy enered recession in early 2008,
beore he effecs o he global financial crisis se in laer in
he year. A drough over he 2007/08 summer led o lower
producion o dairy producs in he firs hal o 2008. Domesic
aciviy slowed sharply as high uel and ood prices dampened
domesic consumpion, while high ineres raes and alling house
prices drove a rapid decline in residenial invesmen.
Te oulook or he New Zealand economy deerioraed
sharply ollowing he inensificaion o he global financial crisis
in Sepember 2008. Similar o experiences across advanced
economies, business and consumer confidence plummeed
as uncerainy dominaed he global financial and economic
environmen. In addiion, local banks access o unding in overseas
markes was emporarily curailed a he heigh o he crisis.
Response o Global Financial Crisis (GFC)
Te Governmen and he Reserve Bank o New Zealand (RBNZ)
responded o he crisis wih a range o measures designed o
alleviae is effecs. Te RBNZ lowered he Official Cash Rae (OCR)rom is level o 8.25% over he year o July 2008 o a low o 2.5% a
he end o April 2009. Te Bank also inroduced a range o aciliies
o ensure ha adequae liquidiy was available o he banking
secor. Te Governmen inroduced reail and wholesale bank
guaranees aimed a resoring confidence in he banking secor
and providing banks wih improved access o wholesale unding.
Te Labour-led Governmen proceeded wih personal income ax
cus on 1 Ocober 2008 and he new Naional-led Governmen,
which came o power in November 2008, inroduced urher ax
reducions effecive rom 1 April 2009.
Oher measures aken by he new Governmen in December2008 were aimed more direcly a alleviaing he effecs o he
downurn, including inrasrucure projecs and a emporary relie
package o assis small and medium-sized businesses.
Growh
In oal, New Zealand experienced six quarers o negaive
economic growh beween he March quarer 2008 and he June
quarer 2009, oalling 4.0% o real GDP. Te relaive shallowness
o he recession compared avourably wih oher naions in
he OECD, wih New Zealand sixh leas affeced ou o he 34
member naions.
Te New Zealand economy hen grew or our consecuive
quarers up o mid-2010, oalling 3.0% o real GDP. Te recovery
was led by expors, wih srong demand rom major rading
Economy
-
8/11/2019 Financial and Economic Overview of Newzealand
10/52
10
parners, Ausralia and China. Tis was helped by hisorically
high prices or New Zealands commodiy expors, which flowed
hrough o a high erms o rade. Te srengh in he exernal
secor was led by a boom in demand rom China, which boosed
dairy and log expors. However, in he second hal o 2010, he
New Zealand economy experienced a echnical recession (wo
quarers o negaive real GDP growh).
Real GDP growh bounced back in 2011, growing 2.6% over he
year despie a devasaing earhquake in Canerbury in February.
Te lif in GDP growh was characerised by srong primary
producion and an improvemen in services aciviy, offseing he
coninued weakness in he consrucion secor. Te Rugby World
Cup in Sepember and Ocober provided a posiive conribuion
o growh in he second hal o he year.
Real GDP srenghened urher a he beginning o 2012, growing
0.9% in he March quarer. Te growh in aciviy was reasonably
broad-based, including good pasoral growing condiions
providing a boos o agriculural producion and ood processing.
However, growh in he middle o 2012 was weaker wih GDP
growh o 0.5% across boh he June and Sepember quarers,
suppored by aciviy in he consrucion secor. Te Canerbury
rebuild is expeced o be a main driver o growh in he coming
year, gaining momenum in he firs hal o 2013.
Canerbury Earhquakes
On 22 February 2011, he Canerbury region on he eas coas
o he Souh Island experienced a devasaing 6.3-magniude
earhquake. A oal o 181 people were killed; he second
deadlies naural disaser in New Zealand hisory. Tis ollowed a
7.1-magniude earhquake on 4 Sepember 2010, in which here
had been no casualies. Te earhquakes (including subsequen
afershocks) caused wide-spread damage o buildings and
inrasrucure, in paricular o he Cenral Business Disric (CBD)
and easern pars o he ciy.
Te New Zealand reasury esimaes he damage rom he
earhquakes a around $30 billion (14% o GDP), much o which
is covered by privae insurance (reinsured hrough overseas
insurance companies) and he governmen-owned Earhquake
Commission (EQC). Despie he significan amoun o disrupion
caused by he earhquakes (in paricular he February 2011
even), he clean-up and demoliion operaions helped minimise
he immediae growh impac. Many businesses were able o
relocae ou o he badly-damaged CBD and keep rading.
Primary and manuacuring producion in he region was no
significanly affeced.
Te Canerbury rebuild is expeced o be a significan driver o
economic growh over he nex five o en years wih boh he
June and Sepember 2012 quarer GDP ouurns providing hard
evidence o rebuilding aciviy. Te pace o he rebuild over he
medium erm is uncerain, in par owing o uncerainy aroundcapaciy consrains.
Labour Marke
Te labour marke has shown lile improvemen ollowing he
GFC wih he unemploymen rae siing a 7.3% or he Sepember
quarer 2012. Tis ollows a wo-year period o volailiy in
he unemploymen rae afer i rose rom a low o 3.5% in he
December quarer 2007 o 6.9% in he December quarer 2009.
Te Canerbury earhquakes iniially had a negaive impac on he
labour marke, wih employmen alling 8.0% in he region in he
year o Sepember 2011. More recenly, labour marke saisics
in Canerbury have srenghened wih employmen rising 2.9% in
he year o Sepember 2012. Excluding Canerbury, employmen
ell 0.4% over he same period, wih he unemploymen rae
above he headline figure, a 7.6%.
Exernal rade
Te prices o he commodiies ha New Zealand expors were a
record high levels in early 2011, afer more han recovering he
significan alls experienced during he GFC. Te high commodiy
prices were widespread, including dairy producs, mea and logs,
owing o surging demand rom China. Te high commodiy prices
flowed hrough o a hisorically high erms o rade, as expor
prices rose much aser han impor prices. Te srong erms
o rade have provided an offse o he weaker real economy,
helping o boos nominal GDP. Since early 2011, global condiions
have deerioraed; he erms o rade eased off heir peak in he
Sepember quarer 2011, and coninued o do so in he firs hal
o 2012. Furher moderaion is expeced o have occurred in he
second hal o 2012 bu improvemen is expeced in 2013 as
higher spo prices flow hrough o expor prices.
Balance o Paymens
Exernal srengh and a subdued domesic economy resuled
in he curren accoun and he ne inernaional invesmen
posiion improving during he recovery rom he GFC. Te annual
curren accoun defici ell rom 8.8% o GDP in he December
quarer 2008 o a low o 1.8% in he March quarer 2010. Te
narrowing o he curren accoun defici was helped by a posiive
balance on he goods accoun since he sar o 2010, wih goods
expors oupacing goods impors. Ne inernaional liabiliies
ell rom 84.6% o GDP in March 2009 o 66.7% in March 2011,
owing o he smaller curren accoun deficis, valuaion changes
and ousanding reinsurance claims relaed o he Canerbury
earhquakes.
Afer he low o 1.8% in March 2010, he curren accoun defici
widened o 4.7% in he Sepember 2012 quarer, as he goods
and invesmen income balances deerioraed, parly reflecing
alling commodiy prices and higher profi outlows rom he
banking secor. Te curren accoun defici is expeced o widen
urher over he medium erm owing o increased impors or
he Canerbury rebuild, as well as increasing deb servicing
coss and higher profi outlows. New Zealands ne inernaional
liabiliies increased rom a rough o 66.7% o GDP in he March
quarer 2011 o 71.2% o GDP in he Sepember quarer and are
expeced o gradually rise urher.
ECONOMY
-
8/11/2019 Financial and Economic Overview of Newzealand
11/52
11
Exchange Rae
Te rade Weighed Index (WI), a baske o exchange raes
or New Zealands major rading parners, began rereaing rom
hisorically high levels in March 2008, as he marke assessed
moneary policy in New Zealand shifing owards a loosening
bias and a weaker oulook or growh. Te WI ell 28% beween
February 2008 and February 2009, cushioning he economy rom
he global downurn.
As he oulook or global growh became more opimisic, he
US dollar weakened and demand or commodiies improved.
As a resul, he WI appreciaed rapidly rom early 2009, rising
rom 52.3 in February o 66.5 in Ocober, a 27% increase. High
commodiy prices, as well as a relaively srong economy, resuled
in urher increases in he WI o 72.1 in Augus 2011, beore
rereaing o around 68 in December as global risk aversion
increased and commodiy prices eased.
Te WI appreciaed again in 2012, rising o 73.0 by April 2012,
beore declining o around 70.0 in he middle o he year as risks
around he euro deb crisis escalaed. Recenly, commodiy prices
or New Zealand expors have sared o recover and euro zone
risks recede slighly, which saw he WI appreciae o 74.3 in
December 2012.
Inflaion
Annual Consumer Price Index (CPI) inflaion was comorably
wihin he Reserve Bank o New Zealands (RBNZ) 1% o 3% arge
band in he wo years ollowing he GFC. Inflaion increasedsignificanly in he December quarer 2010 as an increase in he
rae o goods and services ax (GS) rom 12.5% o 15% on 1
Ocober 2010 was passed on o consumers. Te CPI rose 2.3% in
he quarer, aking annual inflaion o 4.0%, well above he arge
range. Inflaion increased urher during 2011, rising o 5.3% on an
annual basis in June beore alling o 1.8% in he year o December
2011 as he effec o he GS rae rise ell ou o he calculaion.
Over 2012, CPI inflaion coninued o ease, alling 0.2% in he
December 2012 quarer, which brough annual inflaion down o
0.9%, a reflecion o he srong New Zealand Dollar and alling
commodiy prices which have depressed radables prices.
Oulook
In he December 2012 Half Year Economic and Fiscal Update
(HYEFU), he New Zealand reasury expeced annual average
growh in he economy o be 2.3% in he March 2013 year and
2.9% in he March 2014 year, driven mainly by he Canerbury
rebuild and recovery in domesic demand. Recovering world
demand, as well as sill-high commodiy prices, should also assis
expor growh, alhough his is dependen on he global oulook.
Te perormance o he global economy exceeded expecaions
in 2010 bu hen slowed significanly as public simulus measures
aded, naural disasers in Japan and Ausralia caused disrupion
and Europe sovereign-deb issues re-emerged. However,
New Zealands increasing exposure o he aser growing areas
o he world, in paricular Ausralia and Asia excluding Japan,
resuled in expors holding up beer han oherwise would have
been expeced. New Zealand rading parner growh is expeced
o have increased slighly in 2012, o hold up in 2013, and o
pick up again in 2014. While privae consumpion is expeced
o pick up, spending is likely o remain subdued as households
remain cauious. Invesmen is expeced o grow srongly as he
earhquake rebuild ges underway. Te simulus rom he rebuild
is expeced o offse he impac o fiscal consolidaion over he
orecas period.
Monetary Policy
Te ocus o moneary policy is o mainain price sabiliy. A Policy
arges Agreemen beween he Governor o he RBNZ and he
Miniser o Finance ses ou he specific arges or mainaining
price sabiliy, while seeking o avoid unnecessary insabiliy in
oupu, ineres raes and he exchange rae. Te curren Policyarges Agreemen, which was signed in Sepember 2012 on he
appoinmen o a new Governor, requires he Bank o mainain
inflaion in he range o 1% o 3% on average over he medium
erm, bu wih he addiional requiremen o ocus on keeping
uure average inflaion near he 2% arge midpoin.
Following he lowering o he OCR rom 8.25% in mid-2008 o
2.5% in April 2009 in response o he inernaional credi crisis,
he RBNZ began increasing he OCR again as he economy
began o recover. Te OCR was increased o 3.0% in July 2010,
beore a cu o 50 basis poins back o 2.5% as an insurance cu
ollowing he February 2011 Canerbury earhquake. Since hen,
a deerioraing global oulook has mean ha ineres raes have
remained a 2.5%, wih increases no expeced unil lae 2013 as
he Canerbury rebuild ges underway, creaing some inflaionary
pressures.
Fiscal Policy
Pruden Fiscal Managemen
In 1994, he Governmen enaced he Fiscal Responsibiliy Ac.
Te Ac was inended o assis in achieving consisen good qualiy
fiscal managemen over ime. Good qualiy fiscal managemen
should enable he Governmen o make a major conribuion o
he economic healh o he counry and be beer posiioned o
provide a range o services on a susained basis. Tis Ac has now
been repealed bu is provisions have largely been incorporaed
ino Par 2 o he Public Finance Ac 1989.
Par 2 requires he Crowns financial reporing o be in accordance
wih New Zealand Generally Acceped Accouning Pracice
(NZGAAP). Te primary fiscal indicaors are he operaing
balance, deb and ne worh.
Par 2 requires he Governmen o pursue is policy objecives in
accordance wih he principles o responsible fiscal managemen
se ou in he Ac. Tese include: reducing deb o pruden levels o provide a buffer agains
uure adverse evens;
ECONOMY
-
8/11/2019 Financial and Economic Overview of Newzealand
12/52
12
mainaining pruden deb levels by ensuring ha, on average,
oal operaing expenses do no exceed oal operaing
revenues (i.e., he Governmen is o live wihin is means over
ime, wih some scope or flexibiliy hrough he business
cycle);
achieving and mainaining levels o ne worh o provide a
buffer agains adverse evens;
managing he risks acing he Crown; and
pursuing policies ha are consisen wih a reasonable degree
o predicabiliy abou he level and sabiliy o uure ax raes.
Key Fiscal Indicaors
An exended period o growh led o a srong fiscal posiion or
he Governmen in he 2007/08 year. However, he recession
ha began in he firs quarer o 2008 resuled in a decrease in
revenues and expendiure increases which weakened he fiscal
posiion in 2008/09 and subsequen years.
Operating balance: Following a prolonged period o fiscal
deficis, New Zealand achieved surpluses in 1993/94 and
remained in surplus unil 2007/08. In 2011/12, he operaing
balance was a defici o $14.90 billion. Te December 2012
HYEFU orecass or he operaing balance or 2012/13, 2013/14,
2014/15, 2015/16 and 2016/17 are or a defici o $3.28 billion
and surpluses o $0.05 billion, $2.10 billion, $3.55 billion and
$4.39 billion respecively.
Core Crown operaing expenses as a percenage o GDP
decreased o 33.8% in 2011/12, down rom 35.6% in 2010/11.
Expenses are conrolled hrough oupu budgeing, accrual
reporing and decenralised cos managemen.
Net debt: Ne deb increased o 24.8% o GDP in 2011/12 as
a resul o he addiional borrowing underaken o offse he
Governmens operaing deficis.
Net worth: Afer a prolonged period o increases, ne worh
has been decreasing since 2007/08 and sood a $59.3 billion
as a 30 June 2012. Te decreases have arisen as a resul o he
operaing deficis, parly offse by asse revaluaions.
Fiscal Objecives
Te Governmens long-erm fiscal objecives were se ou 2012Fiscal Strategy Report published wih he 2012 Budge and
reconfirmed in he 2013 Budget Policy Statement in December
2012. Te long-erm fiscal objecives include objecives or deb,
operaing balance, operaing expenses and revenue, and ne
worh.
Te long-erm deb objecive requires ne deb o remain
consisenly below 35% o GDP, and o be brough back o
no higher han 20% o GDP by 2020. Consisen wih his,
he objecive or he operaing balance is o reurn o an
operaing surplus sufficien o mee he Governmens ne
capial requiremen, including conribuions o he New ZealandSuperannuaion Fund. Te curren shor-erm fiscal inenion is or
he operaing balance (excluding gains and losses) o be reurned
o surplus as soon as possible and no laer han 2014/15, subjec
o any significan shocks. Curren orecass are or ne core Crown
deb o peak below 30% o GDP in 2016/17.
Public Debt
Prior o March 1985, successive governmens had borrowed
under a fixed exchange-rae regime o finance he balance
o paymens defici. Since he adopion o a reely floaing
exchange-rae regime, governmens have underaken new
exernal borrowing only o rebuild he naions exernal reserves
and o mee refinancing needs.
Direc public deb increased by a ne amoun o $5,719 million
including swaps beween 1 July 2011 and 30 June 2012.
Tis increase was owing o a ne increase in inernal deb o
$6,241 million and a decrease o $522 million in exernal deb.
Governmen gross direc deb amouned o 38.9% o GDP in he
year ended June 2012, up rom 36.6% he previous year.
ECONOMY
Early morning on Lake Benmore, Mackenzie Country.Andris Apse
-
8/11/2019 Financial and Economic Overview of Newzealand
13/52
13
able 5 Gross Domesic Produc and Gross Naional Expendiure1
Te ollowing able shows Gross Domesic Produc and Gross Naional Expendiure in nominal erms or he las five March years:
Year ended 31 March
2008 2009 2010 2011 2012
(dollar amouns in millions)
Compensaion o Employees 80,619 84,848 85,388 87,950 91,468
Ne Operaing Surplus 55,579 50,872 52,673 57,206 58,255
Consumpion o Fixed Capial 25,645 27,773 28,698 28,733 29,155
Indirec axes 22,758 23,100 23,625 26,048 28,669
Less Subsidies 604 1,039 666 823 1,001
Gross Domestic Product 183,997 185,555 189,718 199,113 206,546
Final Consumpion Expendiure General Governmen 34,312 37,428 38,437 39,862 41,550
Privae 107,193 109,753 112,878 117,571 123,493
Physical Increase in Socks 1,611 51 (897) 1,061 1,847
Gross Fixed Capial Formaion 42,415 40,513 36,246 37,019 37,281
Gross National Expenditure 185,531 187,746 186,664 195,512 204,170
Expors o Goods and Services 52,176 58,248 53,770 59,331 62,521
Less Impors o Goods and Services 53,710 60,438 50,716 56,318 60,633
Expenditure on Gross Domestic Product 183,997 185,555 189,718 198,525 206,058
1 2012 daa esimaed. Prior years daa revised.
Source: Saisics New Zealand
ECONOMY
Figure 1 Real Gross Domesic Produc
%
Annual average % change Quarerly % change
Source: Saisics New Zealand
-4
-3
-2
-1
0
1
2
3
4
5
6
Jul 12Jul 11Jul 10Jul 09Jul 08Jul 07Jul 06Jul 05Jul 04Jul 03Jul 02Jul 01Jul 00
National Accounts
In he year o Sepember 2012, he New Zealand economy
recorded annual average GDP growh o 2.5%. Growh in he
Sepember 2012 quarer was 0.2% ollowing growh o 0.3% in
he June quarer and 0.9% in he March quarer.
-
8/11/2019 Financial and Economic Overview of Newzealand
14/52
14
able 6 Gross Domesic Produc by Producion Group1
Te ollowing able shows GDP by major indusries a consan 1995/96 prices.
Year ended 30 September
2008 2009 2010 2011 2012 2012
(dollar amouns in millions) % o oalManuacuring 20,148 17,352 18,647 18,438 18,541 12.8
Renal, hiring and real esae services 17,609 17,649 17,645 17,785 18,063 12.5
Pro, scienific, echnical, admin and suppor 11,011 10,744 10,792 11,232 11,746 8.1
Reail rade and accommodaion 9,159 8,816 9,057 9,206 9,638 6.7
Agriculure, oresry and fishing 6,583 7,648 7,233 7,652 9,179 6.4
Inormaion media and elecommunicaions 8,946 8,998 9,017 9,021 8,768 6.1
Wholesale rade 8,026 7,378 7,465 7,879 8,038 5.6
Healh care and social assisance 7,182 7,408 7,673 7,634 7,712 5.3
ranspor, posal and warehousing 7,436 7,008 7,305 7,459 7,541 5.2
Financial and insurance services 6,472 6,622 6,675 6,841 7,011 4.9
Consrucion 7,213 6,457 6,624 6,215 6,297 4.4
Public adminisraion and saey 5,824 5,898 6,034 6,022 5,950 4.1
Educaion and raining 4,425 4,531 4,586 4,637 4,676 3.2Ars, recreaion and oher services 4,446 4,386 4,527 4,486 4,394 3.0
Elecriciy, gas, waer and wase services 2,938 3,001 3,194 3,220 3,057 2.1
Mining 1,497 1,322 1,426 1,226 1,195 0.8
Producion GDP 140,591 137,214 139,767 140,891 144,385 100.0
Annual Average % change 0.5 (2.4) 1.9 0.8 2.5
Primary indusries 8,532 9,373 8,980 9,106 10,420 7.2
Goods-producing indusries 30,575 27,277 28,945 28,284 28,246 19.6
Service indusries 90,139 89,187 90,565 92,062 93,660 64.9
1 2011 daa esimaed. Prior years daa revised.
Source: Saisics New Zealand
Figure 2 Gross Domesic Produc by Indusry Group
Source: Saisics New Zealand
Mining
Elecriciy, Gas, Waer,& Wase Services
Ars, Recreaion,& Oher Services
Educaion & raining
Public Adminisraion& Saey
Consrucion
Financial &
Insurance Services
ranspor, Posal,& Warehousing
Healh Care &Social Assisance
Wholesale rade
Inormaion Media& elecommunicaions
Agriculure, Foresry,& Fishing
Reail rade &Accommodaion
Renal, Hiring, &Real Esae Services
Manuacuring
ECONOMY
-
8/11/2019 Financial and Economic Overview of Newzealand
15/52
15
ECONOMY
Prices and Costs
Consumer price inflaion declined over he early 1990s
as moneary policy direced a mainaining price sabiliy
(inroduced in 1989) ook effec. Since Sepember 1991, inflaionhas averaged 2.2% per annum.
Annual CPI inflaion increased significanly in he December
quarer 2010 as an increase in he rae o goods and services ax
(GS) rom 12.5% o 15% on 1 Ocober 2010 was passed on o
consumers. Te CPI rose 2.3% in he quarer, aking annual inflaion
o 4.0%, well above he arge range. Inflaion increased urher
during 2011, rising o 4.6% on an annual basis in Sepember
beore alling o 1.8% in he year o December 2011. Tis all was
mainly he resul o he GS rae rise alling ou o he calculaion,
bu alls in ood and communicaion prices also conribued.
Over 2012, CPI inflaion coninued o ease, wih prices rising only
0.2% in he December 2012 quarer, bringing annual inflaion
down o 0.9%. Tis was largely a reflecion o he srong New
Zealand Dollar and alling commodiy prices which depressed
radables prices. Annual inflaion is expeced o increase owardshe mid-poin o he band over 2013, in line wih he economic
recovery, as well as capaciy consrains associaed wih he
Canerbury rebuild.
Growh in he index o salary and ordinary-ime wage raes
reached a record 3.9% in he year o Sepember 2008 beore
declining rapidly over he ollowing wo years o jus 1.5% growh
a he sar o 2010. Since hen i has crep up, reaching 1.9% or
he year ended Sepember 2012.
Te ollowing able shows on a quarerly basis he erms o rade
Index, he Producers Price Index, he Consumers Price Index and
he Labour Cos Index and, in each case, he percenage change
over he same quarer o he previous year.
able 7 Price and Cos Indices
Year Month
erms of
rade Index1Annual %
Change
Producers
Price Index2Annual %
Change
Consumers
Price Index3Annual %
Change
Labour Cost
Index4Annual %
Change
2008
March 1,247 11.6 922 7.3 1,044 3.4 964 3.4
June 1,242 10.7 977 12.3 1,061 4.0 972 3.6
Sepember 1,230 5.8 1,013 13.6 1,077 5.1 984 3.9
December 1,218 1.8 990 9.7 1,072 3.4 991 3.6
2009
March 1,185 (5.0) 965 4.7 1,075 3.0 997 3.4
June 1,074 (13.5) 965 (1.2) 1,081 1.9 1,000 2.9Sepember 1,057 (14.1) 954 (5.8) 1,095 1.7 1,005 2.1
December 1,118 (8.2) 958 (3.2) 1,093 2.0 1,009 1.8
2010
March 1,186 0.1 971 0.6 1,097 2.0 1,012 1.5
June 1,210 12.7 984 2.0 1,099 1.7 1,016 1.6
Sepember 1,246 17.9 991 3.8 1,111 1.5 1,021 1.6
December 1,256 12.3 1,000 4.4 1,137 4.0 1,026 1.7
2011 March 1,266 6.7 1,022 5.3 1,146 4.5 1,030 1.8
June 1,296 7.1 1,031 4.8 1,157 5.3 1,035 1.9
Sepember 1,288 3.4 1,037 4.7 1,162 4.6 1,041 2.0
December 1,269 1.0 1,042 4.2 1,158 1.8 1,047 2.0
2012 March 1,240 (2.1) 1,045 2.3 1,164 1.6 1,051 2.0
June 1,209 (6.7) 1,051 1.9 1,168 1.0 1,056 2.0
Sepember 1,170 (9.2) 1,040 0.3 1,171 0.8 1,061 1.9
December N/A N/A 1,037 (0.5) 1,169 0.9 N/A N/A
1 Base: June quarer 2002 = 1,000.
2 All indusry inpus. Base: December quarer 2010 = 1,000.
3 Base: June quarer 2006 = 1,000.
4 All indusry ordinary-ime salary and wage. Base: June quarer 2009 = 1,000.
Source: Saisics New Zealand
-
8/11/2019 Financial and Economic Overview of Newzealand
16/52
16
Labour Markets
New Zealand has a decenralised labour marke. Enerprise
bargaining predominaes in he negoiaion o he erms and
condiions o employmen. Te Employmen Relaions Ac 2000provides he sauory ramework ha suppors he building o
producive employmen relaionships. Te legislaion proecs he
inegriy o individual choice in erms o reedom o associaion
and union membership and he choice o collecive and
individual employmen agreemens. I also promoes collecive
bargaining, requires he paries o employmen relaionships
(unions, individual employees and employers) o deal wih each
oher in good aih and promoes mediaion o assis in he early
resoluion o workplace dispues.
In 2010, he Governmen made several amendmens o he Ac
in order o increase choice and flexibiliy, ensure he balanceo airness beween employers and employees is appropriae
or boh paries, improve he operaion and efficiency o he
legislaion and reduce is compliance coss.
A se o minimum employmen sandards also underpins
employmen relaionships and proecs he more disadvanaged
in he workorce. Relevan legislaion includes he Minimum Wage
Ac, he Equal Pay Ac, he Holidays Ac and he Parenal Leave
and Employmen Proecion Ac.
Employmen grew srongly prior o 2009, wih annual growh
averaging 2.4% over he our years o Sepember 2008.
During 2009, he lagged effecs o he weakening economyflowed hrough o lower demand or labour, wih employmen
conracing 2.3% in he year o December 2009.
As he economy cooled, he unemploymen rae increased sharply
rom a record low o 3.5% in December 2007 o 7.0% in December
2009. Since hen, he unemploymen rae has flucuaed beween6.1% and 7.3%, in par owing o a volaile paricipaion rae. Te
Canerbury earhquakes iniially had a negaive impac on he
labour marke, wih employmen alling 8.0% in he region in
he year o Sepember 2011. Despie his, employmen overall
was up 1.1% in he year o Sepember 2011. More recenly,
labour marke saisics or Canerbury have srenghened wih
employmen rising 2.9% in he year o Sepember 2012. As he
Canerbury rebuild gahers pace, employmen is expeced o pick
up more subsanially.
Annual growh in labour produciviy peaked in March 2008 a
3.1% beore conracing by 4.2% in March 2009. Produciviygrowh rebounded in he year o March 2010 (up 2.4%) as
employers absorbed underuilised labour, bu remained negaive
or mos o 2010 and 2011. Te decline in annual produciviy
growh coincided wih sof GDP growh over his period, which
resrained firms demand or labour. Modes GDP growh and
weak employmen growh saw labour produciviy grow srongly
over 2012 wih annual growh reaching 2.9% in he year o June
2012. I is expeced o improve in 2013 as he economy coninues
o recover and he Canerbury rebuild gains momenum.
New Zealands relaively high rae o job urnover and o firm
creaion and desrucion suggess ha here are ew regulaory
and insiuional impedimens o employmen, invesmen and
innovaion. Governmen policy is direced o building up skill
levels in he workorce and o addressing skill shorages.
ECONOMY
Te Gammack Mountains, Mackenzie Country, with typical dry tussock vegetation.
Andris Apse
-
8/11/2019 Financial and Economic Overview of Newzealand
17/52
17
Primary IndustriesTe agriculural, horiculural, oresry, mining and fishing
indusries play a undamenally imporan role in New Zealands
economy, paricularly in he expor secor and in employmen.
Overall, he primary secor accouns or 7.4% o GDP and
conribues over 50% o New Zealands oal expor earnings.
Agriculure and Horiculure
Agriculure direcly accouns or around 4.0% o GDP, while he
processing o ood, beverage and obacco producs accouns or
a urher 5.0%. Downsream aciviies, including ransporaion,
rural financing and reailing relaed o agriculural producion,
also make imporan conribuions o GDP.
Recen flucuaions in commodiy (paricularly dairy) prices
have highlighed he imporance ha agriculure plays in he
New Zealand economy. Rising demand rom developing counries
and supply consrains helped push dairy prices o heir highes
ever level in boh world and New Zealand-dollar erms in lae
2007. As a resul, primary secor incomes were boosed, which
in urn lifed spending and invesmen, spilling over o he wider
economy.
Prices or New Zealands key expor commodiies urned down in
mid-2008, gahering momenum as he financial crisis inensified
and placing pressure on already sof domesic demand. However,
commodiy prices recovered srongly during 2009 and over he
second hal o 2010 and firs hal o 2011 as global growh and
demand reurned. New Zealands major dairy exporer, Fonerra,
was able o increase orecas payous o armers on heexpecaions o susained high prices. Over he second hal o
2011 and firs hal o 2012, commodiy prices came off heir highs
as renewed euro area concerns emerged, leading o demand
worries. In lae 2012, Fonerra lowered orecas payous owing o
able 8 Gross Agriculural Producion1
Te ollowing able shows sales o he principal caegories o agriculural producs or he years indicaed and as a percenage o
agriculural sales or 2012.
Year ended 31 March
2009 2010 2011 2012 2012
(dollar amouns in millions) % o oal
Dairy 6,608 7,567 9,819 9,790 45.1Frui 2,123 2,270 2,218 2,354 10.8
Sheepmea 2,153 2,083 2,009 2,249 10.4
Cale 2,066 1,828 2,114 2,186 10.1
Vegeables 926 915 1,035 1,019 4.7
Sales o live animals 741 686 728 784 3.6
Crops and seeds 727 738 769 724 3.3
Wool 405 375 469 608 2.8
Oher arming 499 462 490 528 2.4
Non-arm income 378 393 455 469 2.2
Oher horiculure 273 270 305 300 1.4
Agriculural services 211 219 254 262 1.2
Poulry/eggs 179 183 194 214 1.0
Pigs 182 181 165 187 0.9
Value o livesock change 30 28 29 32 0.1
otal Gross Revenue 17,501 18,197 21,056 21,706 100.0
1 All daa esimaed.
Source: Minisry or Primary Indusries
Indusr ia l Srucure and Pr inc ipa l Economic Secors
-
8/11/2019 Financial and Economic Overview of Newzealand
18/52
INDUSTRIAL STRUCTURE AND PRINCIPAL ECONOMIC SECTORS
18
he coninuing srengh o he New Zealand dollar. Neverheless,
commodiy prices or New Zealands key expors remain a
near-hisorical highs.
Horiculural producs have become increasingly imporan, wihhe principal crops being wine and kiwirui. Oher significan
expor producs include apples and pears, resh and processed
vegeables, and seeds.
Foresry
Foresry and logging makes up around 1.1% o GDP and is he
basis o an imporan expor indusry. Almos 70% o wood rom
he planed producion oress is expored in a variey o orms,
including logs, wood chips, sawn imber, panel producs, pulp and
paper, and urher manuacured wooden producs, including
urniure.
For he year ended June 2012, he value o expors o oresry
producs was $4.3 billion, 10.0% o New Zealands oal
merchandise expors. China and Korea were he larges markes
or log expors a $939 million and $262 million respecively,
while India and Japan coninue o be imporan desinaions or
he expor o sawn imber.
New Zealands climae and soils are well-suied o he growh
o planed producion oress. Tese oress cover an area o
1.8 million hecares and produce over 99% o he counrys
wood. Radiaa pine, which makes up 90% o he planaion esae,
maures in 25 o 30 years, more han wice as as as in is naural
habia o Caliornia. Tis species has had considerable researchinvesmen and has demonsraed is versailiy or a wide range
o uses. Te second mos imporan species is Douglas fir, which
makes up 6% o he planed ores area.
New Zealands oal planed ores growing sock a 1 April
2008 was esimaed a 446 million cubic meres. For he year
ended June 2012, an esimaed 26.6 million cubic meres o wood
were harvesed rom producion oress, an increase o 3.2% rom
a year earlier. O his, 13 million cubic meres were expored as
logs and he balance was manuacured ino a range o producs,
including 3.9 million cubic meres o sawn imber, 2 million cubic
meres o wood panels (consising o fibreboard, veneer, plywoodand paricleboard) and 1.5 million onnes o wood pulp (made
rom harvesed logs plus residues rom sawmills).
A relaively sable harves o 26 o 28 million cubic meres a year
is orecas or he period o 2016. Forecass sugges availabiliy
could increase by an addiional 10 million cubic meres annually
by 2023. Marke condiions and logisical consrains (availabiliy
o logging crews, ranspor and wood processing capaciy) will
dicae how quickly he addiional wood is harvesed.
oal oresry expor revenues decreased 5.5% in he year o
June 2012, owing o a all in expor revenue across mos oresry
produc groups. Tis largely reflecs lower produc prices
compared o he previous year when prices or New Zealand logs
in Asian markes peaked a very high levels.
Fishing
New Zealand has an Exclusive Economic Zone (EEZ) o 4.1 millionsquare kilomeres supporing a wide variey o inshore fish,
some large deep-waer fin fish, squid and una. New Zealands
unpollued coasal waers are also well-suied o aquaculure. Te
main species armed are Pacific oyser, green-lipped mussels and
quinna salmon.
Fishing is a major New Zealand indusry and an imporan
merchandise expor earner. Fish and oher seaood accouned or
$1.5 billion in expor revenues in he year ended June 2012, a
1.2% decrease rom he previous year.
Te mos imporan expor species are green-lipped mussels,
hoki, mackerel, squid and una. Smaller volume bu high value
expors are rock lobser, abalone and orange roughy. Te main
expor markes are China, Hong Kong, Ausralia, he Unied Saes
and Japan.
Te conservaion and managemen o he fisheries is based on
a quoa managemen sysem designed o proec he uure
susainabiliy o he fisheries while aciliaing heir opimum
economic use. Te sysem uses markes, ogeher wih scienific
assessmens o fish socks, o allocae fishing righs wihou
arbirarily resricing fishing mehods.
Energy and MineralsNew Zealand has significan naural energy resources, wih
good reserves o coal, naural gas and oil/condensae, exensive
geohermal fields and a geography and climae which have
suppored subsanial hydro-elecric developmen. Te main
minerals mined, in addiion o coal, are gold, silver, iron sands,
various indusrial minerals and gravel or consrucion.
Programmes or he exploiaion o New Zealands energy
resources were acceleraed afer he firs oil shock in 1973. Oil
and gas exploraion was increased and energy conservaion
programmes were developed and promoed. As a resul,
New Zealand is able o mee a significan proporion o is overall
energy requiremens.
Tere is a renewed ineres in he developmen o energy and
mineral resources o conribue o economic growh. Since
2012, an annual permiing round has been used exclusively or
allocaing peroleum exploraion permis. Te Exclusive Economic
Zone and Coninenal Shel Ac was passed in 2012 and requires
all peroleum and mineral operaions wihin he exclusive
economic zone and coninenal shel o seek consen rom he
Environmenal Proecion Auhoriy. Wihin New Zealands
erriorial waers, operaors mus be permied hrough he
Resource Managemen Ac.
-
8/11/2019 Financial and Economic Overview of Newzealand
19/52
INDUSTRIAL STRUCTURE AND PRINCIPAL ECONOMIC SECTORS
19
Natural Gas: Naural gas is currenly produced rom 17 fields
and wells in he aranaki region o he Norh Island, wih
producion dominaed by he inshore Pohokura oil and gas field,
he long-sanding offshore Maui field and smaller onshore fields.
Tere are hree main uses or gas in New Zealand: elecriciy
generaion, perochemical producion and uel or indusrial
secors.
Gross naural gas producion was 190 peajoules in he year o
June 2012. Naural gas producion had declined sharply afer
he Maui field peaked in 2001, beore sabilising hrough o
early 2007. Producion has since increased wih he coninued
developmen o new smaller and more diverse fields and he
inroducion o he Pohokura field in 2006. Te offshore Kupe
oil and gas field, which was brough ino producion in 2009, has
been a significan conribuor.
Oil: New Zealands crude oil producion was 93.7 peajoules in
he year o June 2012 (around double ha produced in 2006), o
which 94% was expored. New Zealand expors ligh crudes, while
imporing heavier crudes suied o is refining plan a Marsden
Poin. While New Zealand is sill a ne imporer o oil, crude oil
expors are becoming increasingly imporan wih he value o
crude oil expors accouning or 4.1% o oal expors in he year
o Ocober 2012.
Crude peroleum producion has been increasing since he
second hal o 2006 when he Pohokara field commenced
producion. Te ui Area Oil Fields, locaed in he offshore
aranaki basin, commenced commercial producion in he middle
o 2007 and produced 32.5% o New Zealands oil in he 2009
year. New Zealands producion o crude oil was urher boosed
in lae 2008 as Maari, a new field also locaed off he aranaki
coas, sared producion. Te Maari field reached ull producion
in June 2009, around he same ime ha producion rom he ui
fields began o decline.
Coal: Coal is New Zealands mos abundan energy resource
wih oal in-ground resources esimaed a abou 15 billion
onnes. O his, 8.6 billion onnes is judged o be economically
recoverable rom 42 coalfields. O his amoun, 80% is relaively
low-grade lignie, 15% is middle-grade sub-biuminous and he
remaining 5% is biuminous. Lignie is used mainly or indusrial
uel and sub-biuminous coal or indusrial uel, seel manuacure,
elecriciy generaion and domesic heaing. Biuminous coal,
which is ypically very low ash, low sulphur coking coal, is mainly
expored or meallurgical applicaions.
In he June 2012 year, oal coal producion was 5.1 million onnes,
a 3.5% increase over he June 2011 year. Coal producion is
cenred on he Waikao (mainly or several major indusrial users
and he Hunly power saion), he Wes Coas (mainly or expor)
and Oago/Souhland (mainly or local indusrial markes).
Manufacturing
New Zealands manuacuring indusries make an imporan
conribuion o he naional economy. In he year ended June
2012, manuacuring secor oupu accouned or 13.5% o
real GDP. Te proporion o he labour orce employed in
manuacuring was around 10%. Primary secor processing (ood
and oresry) makes up a significan proporion o he secor.
Te ood manuacuring indusry produces high-qualiy producs
or boh he domesic and expor markes. Tis indusry enjoys
he advanages o a naural environmen ha is highly conducive
o pasoral agriculure, an absence o major agriculural diseases,
he poenial or year-round producion and an inernaional
repuaion or excellence. Te indusry had sales o over
$41.1 billion in he year ended June 2012, including more han
$27 billion or mea and dairy producs. Expors o mea and
dairy producs amouned o abou $17 billion in he year ended
Sepember 2012.
able 9 Operaing Income o he Manuacuring Secor by Indusry Group
Te ollowing able ses ou he sales o goods and services in he manuacuring secor or he five years ended 30 Sepember 2012.
Industry Division
Year ended 30 September
2008 2009 2010 2011 2012 2012(dollar amouns in millions) % o oal
Food
Mea and dairy 24,491 25,503 23,865 27,639 27,705 30.5
Oher ood, beverages and obacco 12,874 13,083 13,122 13,256 13,579 14.9
Machinery and equipmen 9,676 9,362 8,567 9,330 9,637 10.6
Meal produc 9,912 9,569 8,740 9,304 9,378 10.3
Peroleum and coal produc 7,130 6,839 6,217 7,136 7,923 8.7
Chemical, polymer and rubber produc 7,322 7,361 6,832 7,161 7,701 8.5
Wood and paper produc 7,888 7,233 7,326 7,503 7,352 8.1
Non-meallic mineral produc 3,015 2,780 2,539 2,451 2,498 2.7
exile, leaher, clohing and oowear 2,584 2,305 2,145 2,075 2,073 2.3
Prining 1,892 1,743 1,721 1,648 1,641 1.8
Furniure and oher manuacuring 1,842 1,683 1,684 1,615 1,565 1.7otal 87,600 88,382 82,155 88,501 90,898 100.0
Manuacuring index1 119 102 110 109 110
1 Base: June quarer 1996 = 100.
Source: Saisics New Zealand
-
8/11/2019 Financial and Economic Overview of Newzealand
20/52
INDUSTRIAL STRUCTURE AND PRINCIPAL ECONOMIC SECTORS
20
Oupu in he manuacuring secor declined hroughou mos
o 2006 and 2007, leaving i vulnerable o urher conracion
as prospecs or he global economy deerioraed rapidly wih
he onse o he GFC in lae 2008. Te impac o weaker global
demand and uncerainy over uure global economic condiions
flowed hrough o he manuacuring secor, wih oupu shrinking
12.6% on an average annual basis in he year o Sepember 2009.
Manuacuring recovered somewha over lae 2010 and early
2011, despie he Canerbury earhquakes, rising 1.8% on a
quarerly basis in he Sepember 2011 quarer. Manuacuring
oupu bounced back in he March quarer o 2012, rising 1.9%
owing o good arming condiions which provided a boos o
ood processing. Oupu coninued o grow in he June quarer o
2012, albei a a slower rae, rising 0.8% in he quarer.
Service IndustriesService indusries make up a large proporion o he economy,
accouning or over wo-hirds o GDP. Te secor recorded
srong growh beween 2000 and 2007, wih annual growh
averaging 3.9%. As he New Zealand economy enered recession
in 2008, services growh slowed, bu no o he exen o oher
secors. Wih services expanding a a more rapid rae han oher
areas o he economy, he secor has increased is share o GDP
rom 66% in 2004 o 69% in 2012. Expor-relaed aciviies such as
ourism and primary secor services inpus play an imporan par
in rends in his secor.
Inrasrucure
In early 2009, he Governmen esablished a Naional
Inrasrucure Uni wihin he reasury o ake a naional overview
o inrasrucure prioriies by providing cross-governmen
coordinaion, planning and experise. Te Uni develops is policy
advice in conjuncion wih an Advisory Board which is made up o
a mix o privae and public secor experise.
Te Uni is also responsible or promulgaing robus and
reliable cross-governmen rameworks or inrasrucure projec
appraisal and capial asse managemen and or monioring he
implemenaion and use o hese rameworks. As par o his work,
he Uni has released Privae Public Parnership (PPP) guidelinesor use by governmen agencies and provides ongoing suppor
or agencies and deparmens involved in PPPs.
On 4 July 2011, he Uni released he second Naional
Inrasrucure Plan, which seeks o provide a common direcion
or he planning, unding, building and use o all economic and
social inrasrucure. I covers he ranspor, elecommunicaions,
energy, waer and social inrasrucure secors. Te purpose
o he plan is o improve invesmen cerainy or businesses
by increasing confidence in curren and uure inrasrucure
provision. Trough he plan, he Governmen is seeking o achieve
beer use o exising inrasrucure, and beer allocaion o newinvesmen. Further information is available on the Infrastructure
website at www.infrastructure.govt.nz . Te nex Inrasrucure Plan
is expeced in 2014.
ranspor
ranspor is a major componen o economic aciviy in
New Zealand. Te counrys ranspor sysem owes is
characerisics, no only o New Zealands dependence on exernal
rade and remoeness rom many o is rading parners, bu also
o is rugged errain and scaered populaion and he division
o he counry ino wo main islands spanning 2,011 kilomeres
in lengh. As a resul, he esablishmen o a comprehensive
nework o roads (around 93,000 kilomeres) and railways (4,000
kilomeres) linked o pors and airpors has involved capial coss
ha are high in relaion o he size o he populaion. However, he
efficiency o he counrys inernal ranspor sysem has played a
criical role in New Zealands economic growh.
Much o his ranspor inrasrucure was originally developed
and operaed by governmen-owned monopolies. oday,
he ranspor secor is largely deregulaed and legislaive
barriers o compeiion have been removed. Many previously
governmen-owned operaions are now privaely owned.
Roading: Te allocaion o unding and he managemen o sae
highway works are managed by a Crown eniy, he New Zealand
ranspor Agency. Consrucion and mainenance work is
conraced o privae secor companies.
Land ranspor inrasrucure and is mainenance are unded
primarily rom disance-based charges or diesel vehicles, excise
duies on perol and moor vehicle regisraion charges. More
recenly, he Governmen has appropriaed addiional unding
o accelerae he consrucion o new roads and he provision o
public ranspor.
olling schemes or new highways are permied where his is
deemed an appropriae unding arrangemen. Te capial or
hese schemes can come rom eiher he public unding body, or
rom privae providers in parnership wih he Governmen.
Railways: New Zealands railway sysem connecs all major
populaion cenres and includes rail erries beween he Norh
and Souh Islands. Te sysem was mainained and operaed
under governmen ownership unil 1993, when i was privaised.
Te Governmen has since purchased back boh he neworkinrasrucure and rail services. Te naional rail sysem operaes
as KiwiRail. In 2010, he Governmen commied $750 million
over hree years (provided in $250 million ranches, subjec o
approved business cases) o suppor a urnaround plan or
KiwiRail o become a ully commercial rail business over ime.
While he Governmen, hrough KiwiRail, owns mos rail
inrasrucure and rolling sock, Auckland and Wellingon
regional auhoriies also own some rolling sock which is used by
conraced providers o meropolian rail services. In 2011, he
Governmen confirmed unding packages o suppor he upgrade
and mainenance o meropolian rolling sock and associaed
nework inrasrucure.
-
8/11/2019 Financial and Economic Overview of Newzealand
21/52
INDUSTRIAL STRUCTURE AND PRINCIPAL ECONOMIC SECTORS
21
Shipping: Niney-nine percen o New Zealands oal
inernaional rade by volume is carried by sea, wih around
30 global and regional shipping lines calling a New Zealand
pors. Coasal shipping services, operaed by boh local and
inernaional shipping companies, provide inra- and iner-island
links and play a key role in he disribuion o bulk cargos such as
peroleum producs and cemen.
Por companies esablished under he Por Companies Ac
1988 operae 13 o New Zealands 14 commercial pors. Tese
companies operae a arms lengh rom heir predominanly local
auhoriy owners, alhough our are parly privaised and lised on
he New Zealand Sock Exchange.
New Zealands shipping policy reflecs he philosophy ha he
counrys ineress are bes served by being a ship-using raher
han a ship-operaing naion. Te policy seeks o ensure or
New Zealand exporers and shippers unresriced access o he
carrier o heir choice and o he benefis o air compeiion
among carriers.
Te Mariime ranspor Ac 1994 regulaes ship saey, mariime
liabiliy and marine environmenal proecion.
Civil Aviation: New Zealand is one o he mos aviaion-oriened
naions in he world. In a populaion o jus over 4.4 million here
are over 10,000 licensed pilos and more han 4,400 aircraf.
Large aircraf are used or inernaional and domesic reigh and
passenger ranspor. Ligh aircraf, including helicopers, are used
exensively in agriculure, oresry and ourism.
New Zealand allows up o 100% oreign ownership o domesic
airlines and here is no domesic air services licensing. Air
New Zealand is he major domesic operaor on main runk and
regional roues, wih some main runk services operaed by Jesar.
New Zealand has around 50 ormal air services agreemens
wih oreign governmens. Te Governmens inernaional air
ranspor policy is o maximise economic benefi o New Zealand,
including rade and ourism, consisen wih oreign policy and
sraegic consideraions. Currenly, around 40 inernaional
airlines, including Air New Zealand, link New Zealand wih he res
o he world wih boh reigh and passenger services. Jus underhal o hese are markeing carriers under code-share agreemens.
Inernaional flighs operae rom a number o inernaional
airpors, o which Auckland, Wellingon and Chrischurch are
he mos significan. Queensown and Dunedin are secondary
airpors used or some inernaional flighs, mainly rans-asman.
Te hree major inernaional airpors are auonomous companies.
Auckland Inernaional Airpor is a publicly lised company and
Wellingon Inernaional Airpor is wo-hirds owned by a publicly
lised company, while Chrischurch Inernaional Airpor is joinly
owned by he Chrischurch Ciy Council and he Governmen.
Te Governmen owns around 73% o Air New Zealand, having
purchased shares in he company in 2001 ollowing a period o
exernal shocks or he airline. Air New Zealand coninues o be
a publicly lised company on he New Zealand Sock Exchange.
Since 2001, Air New Zealand has resrucured is operaions,
which has had he effec o resoring is balance shee o a sound
financial posiion. Te airline has also made profis in each financial
year since 2001 and is currenly engaged in a flee replacemen
programme which is expeced o be compleed in 2016.
Te Governmen has signalled is inenion o dives a porion o
is shareholding in Air New Zealand bu wi ll reain a leas 51% o
he company.
ourism
ourism is one o he larges single sources o oreign-exchange
revenue and a major growh indusry in New Zealand. In heyear o March 2012, inernaional ouris expendiure amouned
o $9.6 billion, an increase o 1.6% on he previous year. Te
counrys scenery, naural environmen and a range o oudoor
aciviies make New Zealand a popular ouris desinaion. oal
visior arrivals amouned o 2,563,000 in he year o Ocober
2012.
Ausralia is New Zealands closes marke and by ar he larges
source o overseas visior arrivals a 1,156,000 (45% o he oal)
in he year ending Ocober 2012. Ausralian arrivals were down
by 17% rom a year earlier.
Afer Ausralia, he nex larges markes are he Unied Kingdom(194,000 or 7.6% o he oal), China (191,000 or 7.5% o he
oal) and he Unied Saes (179,000 or 7% o he oal).
Visior arrivals rom a number o Asian markes have also grown
srongly over he pas decade, albei wih periods o emporary
weakness in he ace o higher oil prices and concerns over he
H1N1 virus in 2009.
ourism arrivals are sensiive o he New Zealand-dollar exchange
rae and ully respond around 15 monhs afer changes. While he
New Zealand dollar is expeced o remain elevaed over 2013, a
gradual depreciaion is expeced in he coming years. Te Rugby
World Cup, held in New Zealand over Sepember and Ocober
2011, emporarily boosed inernaional visior arrivals, bu
numbers reurned o normal levels in subsequen monhs.
Communicaions
New Zealand was he firs counry o open is enire
elecommunicaions marke o compeiive enry in 1989.
elecom New Zealand was privaised in Augus 1990, and oday all
major compeiors are privaely owned. Te elecommunicaions
marke is made up o hree major players (Chorus, elecom and
Vodaone/elsra Clear) and a number o smaller providers.
New Zealand has good broadband access availabiliy (over 95% odwellings) and significan broadband inrasrucure compeiion
-
8/11/2019 Financial and Economic Overview of Newzealand
22/52
INDUSTRIAL STRUCTURE AND PRINCIPAL ECONOMIC SECTORS
22
in paricular areas. Te Governmen is invesing $1.5 billion
hrough he Ulra-Fas Broadband (UFB) Iniiaive o accelerae
he roll-ou o fibre-based broadband o 75% o New Zealanders
by 2019. Tis invesmen is being more han mached by
invesmen rom privae secor parners. Te Iniiaive prioriises
businesses, schools and healh services and cerain ranches o
residenial areas. A relaed Rural Broadband Iniiaive is aimed a
improving broadband availabiliy ouside he UFB area. Chorus
and Vodaone are he major RBI providers.
Te elecommunicaions secor has been hrough a period o
significan regulaory reorm in recen years. Tis includes a
review o he elecommunicaions Ac in 200506, resuling in
he opening up o elecoms exchanges o compeiors hrough
he process o local-loop unbundling. Tis was ollowed by he
operaional separaion o elecom ino hree disinc business
divisions as a urher measure o increase compeiion.
Legislaion was enaced in 2011 o allow or he complee
demerger o elecom ino wo separae companies, a nework
generaor and a reailer. Regulaory provisions apply o he
dominan nework operaor, Chorus Limied, wih regard o he
nework operaion and o boh Chorus and elecom wih regard
o he elecommunicaions Service Obligaions. In November
2011, shareholders voed o separae elecom New Zealand rom
Chorus in order o paricipae in he Governmens UFB iniiaive.
Chorus and elecom New Zealand became separaely lised
companies in December 2011.
A elecommunicaions Commissioner wihin he Commerce
Commission adminisers regulaed elecommunicaion services,
which include nework inerconnecion, elephone number
porabiliy and wholesale elecommunicaion services. Te
Commissioners key uncions are o resolve dispues over
regulaed services, o repor o he Miniser o Communicaions
on he desirabiliy o regulaing addiional services and o
calculae and allocae he elecommunicaions developmen levy.
Posal and courier delivery services are provided by New Zealand
Pos Limied, a commercially-run Sae-Owned Enerprise (SOE),
and a range o privae providers.
New Zealand Pos used is reail nework o expand ino reail
banking in 2002, seing up Kiwibank, wih a urher expansion
ino business banking in 2005. New Zealand Pos did no have
he resources o und he esablishmen o he bank, so he
Governmen made a one-off invesmen o $78.2 million in
New Zealand Pos o und he esablishmen expenses and
capial expendiure involved, and o ensure here was sufficien
capial o mee RBNZ requiremens. Since hen, New Zealand
Pos has made urher capial injecions o bring Kiwibanks share
capial o $360 million a 30 June 2012. Te Governmen neiher
guaranees he bank nor subsidises is ongoing operaions.
Kiwibank announced an afer-ax profi o $79 million or he year
ended 30 June 2012 compared wih a profi o $21 million or he
previous year.
wo major naional radio neworks, as well as a nework ha relays
parliamenary proceedings, are provided by Radio New ZealandLimied, a Crown eniy operaing under a non-commercial
charer. Tere are numerous privae radio saions.
elevision New Zealand Limied (VNZ), he Sae-owned
elevision broadcaser, is a Crown company. VNZ provides
wo naional ree-o-air elevision channels broadcas in boh
analogue and digial plus wo addiional digial channels. VNZ
inends o replace analogue ransmission compleely wihin he
nex ew years. Te sae also unds he Mori elevision Service,
a sauory corporaion, o promoe Mori language and culure.
Privae elevision operaors provide a number o oher naional
and regional channels. Digial and analogue pay V services are
also available.
Tere are five major daily meropolian newspapers in he main
cenres and numerous provincial and communiy newspapers,
all o which are privaely owned. In addiion, here is a naional
weekly business paper, hree Sunday newspapers, a number o
wire services and a growing number o inerne news services
(including offerings rom he major newspaper groups) and
blogsies.
Screen Indusry
Te New Zealand Film Commission was esablished in 1978 o
finance disincly New Zealand films, wih he aim o reachingsignifican New Zealand audiences and producing high reurns
on invesmen in boh financial and culural erms. More han
200 eaure films have been made in New Zealand since he
Commission was esablished. Around hal o hese have received
Film Commission finance, while he remainder have been
financed by local and, increasingly, by major offshore producion
companies.
New Zealands screen indusry coninues o gain inernaional
prominence ollowing he success o several big budge
producions filmed or produced in New Zealand, such as he Lord
o he Rings rilogy, King Kong and Avaar, as well as numerousmedium and small budge films produced by New Zealand and
offshore companies. Filming on he hree-movie Lord o he Rings
prequel, Te Hobbi, commenced in Wellingon in March 2011.
Te firs movie, Te Hobbi An Unexpeced Journey, premiered
in Wellingon in December 2012.
Te New Zealand screen indusry recorded gross revenue
o $2.99 billion in he year ending March 2011. Te screen
producion indusry is characerised by a large number o small
reelancers and conracors working boh independenly and in
coordinaion wih larger producion and broadcasing companies.
-
8/11/2019 Financial and Economic Overview of Newzealand
23/52
23
External radeExernal rade is o undamenal imporance o New Zealand.
Primary secor-based expors and commodiies remain imporan
sources o expor receips, while expors o services and
manuacured producs also provide a significan conribuion.
Tis, ogeher wih a reliance on impors o raw maerials and
capial equipmen or indusry, makes New Zealand srongly
rade-oriened.
Merchandise rade
Afer a record merchandise rade defici o $7.3 billion in early
2006, srong growh in he erms o rade helped reduce he
defici o $5.2 billion in he year o Sepember 2008. Weakdomesic demand, uncerainy surrounding he global economic
environmen and a sharp depreciaion in he New Zealand dollar
produced a large drop in impored goods a he beginning o
2009. Domesic demand picked up again in 2010 as he domesic
economy recovered rom recession.
Expors held up well hrough he GFC, mainly owing o commodiy
demand rom China, which coninued o grow srongly. Expor
values surged o new highs in 2011, wih he annual oal up 11%
in he June quarer rom he previous year. Tis resuled in an
improving merchandise rade balance, reaching a surplus in he
12 monhs o April 2010 and remaining in surplus hroughou heres o 2011. Te merchandise rade balance hen deerioraed
o a defici o 1.3 billion in he year o Ocober 2012 owing o a
all in commodiy prices and a decline in expor values rom year-
earlier levels.
rade in Services
rade in services is dominaed by ouris flows. Te annual level
o services expor volumes has been in decline since 2005, wih
he high New Zealand dollar and he recession ollowing he
global financial crisis having an adverse impac on visor arrivals
rom high-spending counries, including he Unied Saes, Japan
and Europe. Arrivals rom Ausralia have increased, resuling in
higher oal visior numbers bu lower average expendiure. Onan annual basis, real services expors rose 1.7% in he year o June
2012.
Te services balance recorded in he Balance o Paymens peaked
a a surplus o $1,977 million in he year o Sepember 2003. Te
slowdown in inbound ourism and srong growh in he number
o New Zealanders ravelling overseas saw he serv ices balance all
o a defici o $741 million in he year o March 2009 beore
recovering o a surplus o $337 million in he year o March 2010.
Since hen, a defici has reurned, increasing o $792 million in he
year o June 2012. Te high New Zealand dollar which has
boosed services impors has been a major conribuing acor inhe deerioraion.
able 10 Balance o Exernal Merchandise rade1
Te ollowing able records he oal value o expors and impors o goods since 2008.
Year to
October
Exports Imports Balance of rade Exports as % of Imports
(dollar amouns in millions)
2008 42,431 47,700 (5,269) 89.0
2009 40,718 41,894 (1,176) 97.2
2010 42,513 41,256 1,256 103.0
2011 47,002 46,313 688 101.5
2012 46,373 47,706 (1,334) 97.2
1 Includes re-expors.
Source: Saisics New Zealand
Exerna l Secor
-
8/11/2019 Financial and Economic Overview of Newzealand
24/52
EXTERNAL SECTOR
24
erms o rade
Te erms o rade reached new highs during 2008, as high
commodiy prices were refleced in expor prices, paricularly
or dairy producs. Te erms o rade ell significanly during
2009, reflecing he impacs o he GFC on commodiy prices
and demand. Expor prices ell much more han impor prices. As
he global recovery commenced, he erms o rade recovered,
hiing new highs in he June 2011 quarer. In he Sepember
quarer 2012, he erms o rade ell 9.2% rom year-earlier levels
as weak global demand led o a sharp decline in produc prices
received by New Zealand exporers. Te goods erms o rade are
expeced o weaken urher in he final quarer o 2012 beore
rising hereafer as he demand or New Zealands commodiy
expors is expeced o ousrip global supply. able 11 shows he
expor and impor price indices, he overall erms o rade index
and he annual percenage change in each.
able 11 erms o rade Indices
Export Price
Index1Annual %
Change
Import Price
Index1Annual %
Change
erms of rade
Ind