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Economy of New Zealand

New Zealand's economy historically has been based on a foundation of exports from its very efficient agricultural system. Leading agricultural exports include dairy products, meat, forest products, fruit and vegetables, fish, and wool. New Zealand was a direct beneficiary of many of the reforms achieved under the Uruguay Round of trade negotiations, with agriculture in general and the dairy sector in particular enjoying many new trade opportunities. The country has substantial hydroelectric power and reserves of natural gas, although the largest natural gas condensate and oil field--supplying nearly 75% of the country's hydrocarbons--was expected to be tapped out by 2009. Based on recent natural gas exploration between Australia and New Zealand, natural gas production is projected to increase by 3.5% by 2020. Leading manufacturing sectors are food processing, wood and paper products, and metal fabrication. Service industries, particularly financial, insurance, and business services, form a significant part of New Zealand's economy. As of March 2008 New Zealand had 1,506,000 Internet subscribers, amounting to approximately 65% of New Zealand households, ranking above Australia, the U.K., and the U.S. Since 1984, government subsidies including for agriculture were eliminated; import regulations liberalized; tariffs unilaterally slashed; exchange rates freely floated; controls on interest rates, wages, and prices removed; and marginal rates of taxation reduced. Tight monetary policy and major efforts to reduce the government budget deficit brought the inflation rate down from an annual rate of more than 18% in 1987. The restructuring and sale of government-owned enterprises in the 1990s reduced government's role in the economy and permitted the retirement of some public debt. As a result, New Zealand is now one of the most open economies in the world. After five consecutive quarters of economic retrenchment, the New Zealand economy grew by less than 0.1% over the June 2009 quarter, thereby ending its recession. Growth is forecast to remain weak in the short term as households go through a period of debt consolidation. Annual average growth was expected to be its weakest in the year ending June 2009. After this, an export-led recovery is expected to lead to growth increasing to trend levels of around 3% in 2011. New Zealand's unemployment rate jumped 6.5% from the September 2009 quarter to 7.3% in the last three months of 2009, its highest level in more than 10 years, New Zealand's unemployment rate compared with the Organization for Economic Cooperation and Development (OECD) average of 8.6%, and was ranked 12th of 27 OECD countries with standardized unemployment rates. A 22% drop in the number of New Zealanders and long-term residents departing the country in 2009 produced the highest net rise in permanent and long term (PLT) migration since 2004. Net inward long-term migration in calendar 2009 was 21,300, compared to 3,800 in 2008, almost twice the average of 11,900 between 1990 and 2009, and net losses during a period of local economic weakness from 1998 to 2001. Rather than an influx of new arrivals escaping the global financial crisis, 2009's spike in net permanent migration was driven by the fact that the 65,200 PLT departures were down 18,500 on the 2008 figures. Long-term arrivals were down 1% at 86,400. Of those departures, 41,600 were New Zealand citizens, down by a third from 60,600 in 2008. For the month of December, 2009 PLT arrivals exceeded departures by 1,700 on a seasonally adjusted basis. Short-term visitor arrivals rebounded with the largest inbound arrivals total ever recorded for any month recorded in December 2009, at 341,300, up 6% from the previous high recorded in December 2008, driven in part by growth in the numbers visiting family and friends over the Christmas period. Arrivals from Australia were up 14,000 (11%) for December 2009 compared with the same month a year earlier, continuing large monthly increases recorded since April 2009. Americans also chose New Zealand for short trips in record numbers for a December month, at 26,400, compared with the previous December high of 25,900 in December 2003. Overseas visitor arrivals numbered 2.5 million in the year ended June 2009. This was a 2.5% decrease from the June 2008 year. The largest sources of visitors to New Zealand in the year ended June 2009 were Australia, the United Kingdom, the United States, China, and Japan. Traditionally, New Zealand's economy has been helped by strong economic relations with Australia. New Zealand and Australia are partners in "Closer Economic Relations" (CER), which allows for free trade in goods and most services. Since 1990, CER has created a single market of more than 22 million people, and this has provided new opportunities for New Zealand exporters. Australia is now the destination of 25% of New Zealand's exports, compared to 14% in 1983. Both sides also have agreed to consider extending CER to product standardization and taxation policy. New Zealand has had a free trade agreement with Singapore since 2001. In July 2005, both countries joined with Chile and Brunei to form a Trans-Pacific Strategic Economic Partnership (TPP), liberalizing trade in goods and services between them. On September 22, 2008, comprehensive negotiations for the U.S. to join the TPP were launched, and following President Barack Obama’s December 2009 announcement of U.S. interest in re-engaging on TPP, talks were scheduled to begin in early 2010. In April 2005, New Zealand initialed a free-trade deal with Thailand. In April 2008 New Zealand concluded a free trade agreement (FTA) with China. In October 2009, negotiations concluded on an FTA with the Gulf Cooperation Council (GCC--made up of Bahrain, Oman, Kuwait, Saudi Arabia, the U.A.E., and Qatar); it is likely that the agreement will be signed in the first half of 2010. The New Zealand/Hong Kong, China Closer Economic Partnership (CEP) was concluded in November 2009, and the agreement will likely be signed in March 2010. In December 2007, New Zealand and South Korea announced the beginning of a study group to explore the benefits of a bilateral free trade agreement. The first round of FTA negotiations between New Zealand and South Korea took place in Seoul in June 2009. In June 2008, New Zealand and Japan established an economic working group to review their bilateral economic relationship. New Zealand and India agreed to undertake a joint study into the implications of a FTA in 2007. That study was completed in February 2009, and in January 2010 the two governments announced that negotiations will commence between their countries. New Zealand's top six trading partners (total trade) as of November 2009 included Australia, the United States, the People's Republic of China, Japan, the United Kingdom, and the Republic of Korea. Australia continued to be New Zealand’s principal export market, totaling U.S. $6.2 billion, and contributing 22.6% of total exports as of November 2009. The United States and the People's Republic of China received U.S. $2.8 billion each. As New Zealand’s fourth-largest export destination, export trade with Japan was valued at U.S. $1.9 billion. Australia remained New Zealand’s largest source of merchandise imports in the year ended June 2009, accounting for 17.6% of total imports. Total imports from Australia were valued at U.S. $5.1 billion, a 6.5% decrease from the November 2008 year. China was New Zealand’s second-largest source of imports, with a value of U.S. $4.2 billion, or 14.4% of total imports. The United States is the second-largest trading partner for New Zealand, with U.S. goods and services accounting for approximately 9% of all imports. The New Zealand dollar reached a 24-year high of over U.S. $0.80 in July 2007 (the highest since the New Zealand dollar was floated), but as of February 2010 the Kiwi dollar was trading at U.S. $0.69. New Zealand's total imports from the U.S. as of June 2009 amounted to 10.1% of total New Zealand imports, totaling NZ $4.4 billion (U.S. $ 3 billion). The market-led economy offers many benefits for U.S. exporters and investors. Investment opportunities exist in chemicals, food preparation, finance, tourism, and forest products, as well as in franchising. The best sales and investment prospects are for whole aircraft and aircraft parts, medical or veterinary instruments, motor vehicles, information technology, hotel and restaurant equipment, telecommunications, tourism, franchising, food processing and packaging, and medical equipment. On the agricultural side, the best prospects are for fresh fruit, snack foods, and soybean meal. New Zealand welcomes and encourages foreign investment without discrimination. The Overseas Investment Office (OIO) must give consent to foreign investments that would control 25% or more of businesses or property worth more than NZ $100 million. Restrictions and approval requirements also apply to certain investments in land and in the commercial fishing industry. OIO consent is based on a national interest determination. Foreign buyers of land can be required to report periodically on their compliance with the terms of the government's consent to their purchase. The OIO, part of Land Information New Zealand, took over the functions of the Overseas Investment Commission in August 2005. Full remittance of profits and capital is permitted through normal banking channels. As of March 2009, U.S. foreign direct investment in New Zealand amounted to U.S. $2.2 billion (NZ $3.2 billion). A number of U.S. companies have subsidiary branches in New Zealand. Many operate through local agents, and some are in association in joint ventures. The American Chamber of Commerce is active in New Zealand, with its main office in Auckland. GDP (as of statistical year ended September 2009): U.S. $133.8 billion (NZ $182 billion). Real annual GDP growth rate: Following five consecutive quarters of economic contraction, the New Zealand economy expanded by less than 0.1% over the June 2009 quarter, thereby ending its recession. Per capita income (March 2008): U.S. $29,866. Exchange rate (average for January to December 2009): U.S. $1 = NZ $1.456 (U.S. $0.71 = NZ $1). Natural resources: Timber, natural gas, iron sand, coal. Agriculture (4.9% of GDP): Products--dairy products, meat, forestry products. Industry (goods-producing industries 20.5% of GDP, service industries 68.8% of GDP): Types--finance, insurance, and business services; manufacturing; personal and community services; transport and communication; wholesale trade; construction; government administration and defense; fishing, forestry, and mining; electricity, gas, and water. Trade (November 2009): Exports to U.S.--U.S. $2.8 billion: frozen beef, casein, whey, timber, sheep meat, wine, unwrought aluminum, cheese, and butter. Imports from U.S.--U.S. $3 billion: consisting primarily of aircraft petroleum oils (crude), medical or veterinary instruments, motor vehicles, computers, aircraft parts, machinery, turbojets, insecticides, and telephone equipment. Major trading partners (rank ordered as of November 2009)--Australia, United States, People's Republic of China, Japan, United Kingdom and the Republic of Korea.

Geography of New Zealand

Area: total area: 270,534 sq km (104,440 sq.mi.) comparative area: about the size of Colorado note: includes Antipodes Islands, Auckland Islands, Bounty Islands, Campbell Island, Chatham Islands, and Kermadec Islands Cities: Capital--Wellington (326,900). Other cities--Auckland (910,200), Christchurch (312,600). Terrain: Highly varied, from snow-capped mountains to lowland plains. Climate: Subtropical to temperate, with sharp regional contrasts Location: Oceania, islands in the South Pacific Ocean, southeast of Australia Map references: Oceania Land boundaries: 0 km Coastline: 15,134 km Maritime claims: continental shelf: 200 nm or to the edge of the continental margin exclusive economic zone: 200 nm territorial sea: 12 nm International disputes: territorial claim in Antarctica (Ross Dependency) Natural resources: natural gas, iron ore, sand, coal, timber, hydropower, gold, limestone Environment: current issues: deforestation; soil erosion; native flora and fauna hard-hit by species introduced from outside natural hazards: earthquakes are common, though usually not severe Note: about 80% of the population lives in cities

Government of New Zealand

New Zealand has a parliamentary system of government closely patterned on that of the United Kingdom and is a fully independent member of the Commonwealth. It has no written constitution. Executive authority is vested in a cabinet led by the prime minister, who is the leader of the political party or coalition of parties holding the majority of seats in parliament. All cabinet ministers must be members of parliament and are collectively responsible to it. The unicameral parliament (House of Representatives) usually has 120 seats, seven of which currently are reserved for Maori elected on a separate Maori roll. However, Maori also may run for, and have been elected to, non-reserved seats. Parliaments are elected for a maximum term of 3 years, although elections can be called sooner. The judiciary consists of the Supreme Court, Court of Appeal, High Courts, and District Courts. New Zealand law has three principal sources--English common law, certain statutes of the U.K. Parliament enacted before 1947, and statutes of the New Zealand parliament. In interpreting common law, the courts have been concerned with preserving uniformity with common law as interpreted in the United Kingdom. Local government in New Zealand has only the powers conferred upon it by parliament. The country's 12 regional councils are directly elected, set their own tax rates, and have a chairperson elected by their members. Regional council responsibilities include environmental management, regional aspects of civil defense, and transportation planning. The 74 "territorial authorities"--15 city councils, 58 district councils in rural areas, and one county council for the Chatham Islands--are directly elected, raise local taxes at rates they themselves set, and are headed by popularly elected mayors. The territorial authorities may delegate powers to local community boards. These boards, instituted at the behest either local citizens or territorial authorities, advocate community views but cannot levy taxes, appoint staff, or own property. Principal Government Officials Head of State--Queen Elizabeth II Governor General--Anand Satyanand Prime Minister--John Key Foreign Minister--Murray McCully Ambassador to the United States--Roy Ferguson (replacement is Michael (Mike) Moore, effective July-August 2010) Ambassador to the United Nations--James (Jim) McLay New Zealand maintains an embassy in the United States at 37 Observatory Circle NW, Washington, DC 20008 (tel. 202-328-4800, fax 202-667-5227). A consulate general is located in Los Angeles (tel. 310-207-1605, fax 310-207-3605). Tourism information is available through the New Zealand Tourism Board office in Santa Monica, California (toll-free tel. 800-388-5494) or through the following website : POLITICAL CONDITIONS The traditionally conservative National Party and left-leaning Labour Party have dominated New Zealand political life since a Labour government came to power in 1935. During its first 14 years in office, the Labour Party implemented a broad array of social and economic legislation, including comprehensive social security, a large-scale public works program, a 40-hour workweek, a minimum basic wage, and compulsory unionism. The National Party won control of the government in 1949 and adopted many welfare measures instituted by the Labour Party. Except for two brief periods of Labour governments in 1957-60 and 1972-75, National held power until 1984. After regaining control in 1984, the Labour government instituted a series of radical market-oriented reforms in response to New Zealand's mounting external debt. It also enacted anti-nuclear legislation that effectively brought about New Zealand's suspension from the ANZUS security alliance with the United States and Australia. In October 1990, the National Party again formed the government, for the first of three 3-year terms. In 1996, New Zealand inaugurated a mixed-member proportional (MMP) system to elect its parliament. The system was designed to increase representation of smaller parties in parliament and appears to have done so in the MMP elections to date. Since 1996, neither the National nor the Labour Party has had an absolute majority in parliament, and for all but one of those years, the government has been a minority one. The Labour Party won elections in November 1999 and again in July 2002. In 2002 Labour formed a coalition, minority government with the Progressive Coalition, a left-wing party holding two seats in parliament. The government relied on support from the centrist United Future Party to pass legislation. Following a narrow victory in the September 2005 general elections, Labour formed a coalition with the one-seat Progressive Party. The government also entered into limited support agreements with the United Future New Zealand and NZ First Parties, whose leaders were respectively given the Revenue and Foreign Affairs ministerial positions outside of the cabinet. This gave Labour an effective one-seat majority with which to pass legislation in parliament. Labour also secured an assurance from the Green Party that it would abstain from a vote of confidence against the government. The 2005 elections saw the new Maori Party win four out of the seven reserved Maori seats. The additional seat in the 121-member parliament was the result of an overhang from 2005 elections. There were two independent members of parliament (MPs): a former Labour Party MP and a former United Future New Zealand MP, both of whom left their respective parties in 2007. The 2008 general election on November 8 was comfortably won by the John Key-led National Party. National won 45% of the popular vote (58 seats) to Labour's 34% (43 seats). The Green Party won nine seats; ACT won five; the Maori Party picked up an additional Maori seat to bring its total number of seats to five; the Progressives and United Future won one seat each. New Zealand First, the party of former foreign minister Winston Peters, did not win enough votes to return to parliament. On November 16, Key announced the formation of a new National-led center-right government in coalition with the right-leaning ACT and the centrist United Future party. National also entered into a limited support agreement with the Maori Party. Collectively, this gives the government 69 votes to pass legislation in the new 122-member parliament, the two extra seats the results of an overhang from the election. The leaders of ACT and United Future were respectively given the local government and revenue ministerial portfolios. ACT's co-leader was given the consumer affairs ministerial portfolio. The co-leaders of the Maori Party were each given the Maori affairs and community ministerial portfolios, although their posts are outside of cabinet with the right to dissent on other policy issues outside portfolio areas. The government was sworn in on November 19, 2008, with Key becoming New Zealand's 38th prime minister. During her election night concession speech, outgoing Prime Minister Helen Clark announced that she would step down as Labour's leader after 15 years in charge. She was succeeded as party leader by Phil Goff. Clark resigned from parliament on April 8, 2009 to become the Administrator of the United Nations Development Program in New York. The 49th parliament commenced on December 8, 2008 and resumed session on February 9, 2010 after a customary summer recess. The next general election is scheduled to be held by November 2011. Type: Parliamentary. Constitution: No formal, written constitution. Independence: Declared a dominion in 1907. Branches: Executive--Queen Elizabeth II (chief of state, represented by a governor general), prime minister (head of government), cabinet. Legislative--unicameral House of Representatives, commonly called parliament. Judicial--four-level system: District Courts, High Courts, the Court of Appeal, and the Supreme Court, which in 2004 replaced the Judicial Committee of the Privy Council in London as New Zealand's highest court of appeal. There also are specialized courts, such as employment court, family courts, youth courts, and the Maori Land Court. Administrative subdivisions: 12 regions with directly elected councils and 74 districts (15 of which are designated as cities) with elected councils. There also are a number of community boards and special-purpose bodies with partially elected, partially appointed memberships. Political parties: Labour, National, Progressive Party, New Zealand Green Party, New Zealand First, ACT, United Future New Zealand, Maori Party, and several smaller parties not represented in parliament. There are currently two independent members of parliament. Suffrage: Universal at 18.

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History of New Zealand

Archaeological evidence indicates that New Zealand was populated by fishing and hunting people of East Polynesian ancestry perhaps 1,000 years before Europeans arrived. Known to some scholars as the Moa-hunters, they may have merged with later waves of Polynesians who, according to Maori tradition, arrived between 952 and 1150. Some of the Maoris called their new homeland "Aotearoa," usually translated as "land of the long white cloud." In 1642, Abel Tasman, a Dutch navigator, made the first recorded European sighting of New Zealand and sketched sections of the two main islands' west coasts. English Captain James Cook thoroughly explored the coastline during three South Pacific voyages beginning in 1769. In the late 18th and early 19th centuries, lumbering, seal hunting, and whaling attracted a few European settlers to New Zealand. In 1840, the United Kingdom established British sovereignty through the Treaty of Waitangi signed that year with Maori chiefs. In the same year, selected groups from the United Kingdom began the colonization process. Expanding European settlement led to conflict with Maori, most notably in the Maori land wars of the 1860s. British and colonial forces eventually overcame determined Maori resistance. During this period, many Maori died from disease and warfare, much of it intertribal. Constitutional government began to develop in the 1850s. In 1867, Maori won the right to a certain number of reserved seats in parliament. During this period, the livestock industry began to expand, and the foundations of New Zealand's modern economy took shape. By the end of the 19th century, improved transportation facilities made possible a great overseas trade in wool, meat, and dairy products. By the 1890s, parliamentary government along democratic lines was well- established, and New Zealand's social institutions assumed their present form. Women received the right to vote in national elections in 1893. The turn of the century brought sweeping social reforms that built the foundation for New Zealand's version of the welfare state. Maori gradually recovered from population decline and, through interaction and intermarriage with settlers and missionaries, adopted much of European culture. In recent decades, Maori have become increasingly urbanized and have become more politically active and culturally assertive. New Zealand was declared a dominion by a royal proclamation in 1907. It achieved full internal and external autonomy by the Statute of Westminster Adoption Act in 1947, although this merely formalized a situation that had existed for many years. New Zealand on the Web has resources relating to the History, People, Language and Culture of New Zealand.

People of New Zealand

Most of the 4 million New Zealanders are of British origin. About 15% claim descent from the indigenous Maori population, which is of Polynesian origin. Nearly 76% of the people, including a large majority of Maori, live on the North Island. In addition, 265,974 Pacific peoples live in New Zealand. During the late 1870s, natural increase permanently replaced immigration as the chief contributor to population growth and accounted for more than 75% of population growth in the 20th century. Nearly 85% of New Zealand's population lives in urban areas (with almost one-third in Auckland alone), where the service and manufacturing industries are growing rapidly. New Zealanders colloquially refer to themselves as "Kiwis," after the country's native bird. Nationality: Noun--New Zealander(s). Adjective--New Zealand. Population: 4.33 million Annual population growth rate (during year ending September 2009): 1.2%. Ethnic groups: European 67.6%; Maori 14.6%; Asian 9.2%; other Polynesian Pacific peoples 6.9%; Middle Eastern, Latin American, and African 0.9%; other 10.7%. (Note: People can choose to identify with more than one ethnic group.) Religions: Christian 50%, no religion 32.3%, not stated 7.3%, Hindu 1.6%, Buddhist 1.3%, Islam/Muslim 0.9%, Jewish 0.2%, Spiritualism/New Age 0.5%, other 0.6%. Languages: English, Maori, New Zealand Sign Language. Education: Years compulsory--ages 6-16. Attendance--100%. Literacy--99%. Health: Infant mortality rate (December 2006)--5.1/1,000. Life expectancy (December 2006)--males 77.9 yrs., females 81.9 yrs. Work force: 75.2% of 15-64 year olds or 2.057 million. Services and government--59%; manufacturing and construction--32%; agriculture, forestry, fisheries, and mining--8.9%.