Oceania

New Zealand Economy Overview

ECONOMY: GENERAL INFORMATION

The world recession, which since the 1970s has hit – where more and less – practically all developed countries, has also reached New Zealand, slowing its rate of economic development, triggering inflationary processes and increasing the number of unemployed (however lower at 10%). Even in the period 1980-92, the real increase in per capita income continued to be very small, which stood at $ 12,000. Yet this relatively small country, not endowed with significant natural resources, apart from hydroelectric potential, and certainly not favored by its geographical position, had succeeded in little more than a century – from that famous 1844, the year in which they were first introduced merino sheep from Australia- to achieve a level of economic development and a standard of living among the highest in the world. In fact, the recession, even if it did not cause particularly serious damage, highlighted the profound structural imbalances present in the New Zealand economy. The country traditionally bases its prosperity on livestock breeding and related industrial activities, such as the preservation of meat, the production and processing of milk, the tanning of skins, the processing of wool, activities that also make an essential contribution to ‘export. It follows that both production and exports are scarcely diversified and largely influenced by the fluctuations of prices on international markets; moreover the Great Britain’s entry into the EEC has significantly reduced the possibility of advantageously placing traditional export products. The government has therefore for some time been concerned with favoring industrial expansion, developing new productive sectors, and finding other commercial outlets in the country, in particular in Oceania itself (Australia now ranks first in the overall trade of New Zealand, a country located in Oceania according to ebizdir.net) and in Asia, where Japan is now one of New Zealand’s main trading partners. Starting from the 1990s, therefore, there has been a progressive orientation towards industry and the tertiary sector, and a vast maneuver of economic liberalization has been implemented which has significantly modified structures that are among the most protected and subsidized in the industrialized world. Many measures have been adopted, from the strictly monetary ones (devaluation and introduction of “fluctuation”) to those for the reduction of incentives and taxes, from the reorganization of ministerial management to the privatization of various state companies (banks, industries, the national airline etc.); this austerity policy has brought positive results. The subsequent Conservative government continued along this path, through the privatization of state-owned enterprises and the abolition of agricultural subsidies; this allowed the transition from a mainly rural economy to a tertiary and industrialized one. All this has favored the spread of new technologies, an increase in the level of income and the reduction of inflation (3.4% in 2006); but it has also led to a greater disparity in income distribution and an increase in unemployment, despite the fact that it remains, if compared to that of other industrialized countries, decidedly contained (3.8% in 2006). Since the mid-1990s, GDP growth has been constant, even if the 1998 financial crisis, which hit Southeast Asia, had profound repercussions on New Zealand (some Asian countries are in fact important trading partners of the country); however, thanks to the low inflation rate, the limited public debt, the favorable tariffs and the tax cut in 1999, the GDP started to grow again, to settle in 2008 at 868.940 mln US $, with a GDP it has had profound repercussions on New Zealand (some Asian countries are in fact important trading partners of the country); however, thanks to the low inflation rate, the limited public debt, the favorable tariffs and the tax cut in 1999, the GDP started to grow again, to settle in 2008 at 868.940 mln US $, with a GDP it has had profound repercussions on New Zealand (some Asian countries are in fact important trading partners of the country); however, thanks to the low inflation rate, the limited public debt, the favorable tariffs and the tax cut in 1999, the GDP started to grow again, to settle in 2008 at 868.940 mln US $, with a GDP per capita of US $ 30,049 million, data that place New Zealand at the levels of the economies of the most advanced Western countries.

New Zealand Economy Overview

HISTORY: THE WORLD WARS

In 1911 the political elections were won by the Reform Party which, albeit changing its name, held power until 1935. When the First World War broke out, New Zealand sided with the motherland, to which it provided men and means. Between 1915 and 1919 a coalition government was in power, consisting of the Reform Party and the Liberal Party. Signatory of the peace treaty, New Zealand was one of the founding states of the League of Nations, from which it received Samoa as a type C mandate. The great crisis of 1929 had its consequences felt also in New Zealand, whose currency was devalued. The great mass of the unemployed and small farmers then turned to the Labor Party, which won the 1935 elections and came to power. The Statute of Westminster (1931), which also granted full external autonomy and therefore complete sovereignty to the Dominions, was badly received in New Zealand, which felt its fate linked to the protection of the imperial fleet. Only in 1939, New Zealand began to apply some of its clauses. Internally, the Labor government introduced major reforms: the 40-hour week, old-age pensions and free medical care (1938). When World War II broke out, New Zealand once again sided with the motherland and sent troops to the African and European fronts.