Economy of New Zealand
New Zealand has a modern developed economy with an estimated GDP of $161 billion (2014).
The country has a high standard of living with GDP per capita estimated at $35,649 (comparative figures are Australia $38,900 and United States $41,800). The standard of living has also been measured in other forms, including being ranked 7th on the 2014 Human Development Index and 15th in The Economist's 2005 world-wide quality-of-life index.
The tertiary sector is the largest sector in the economy and constitutes 71% of GDP, followed by the secondary sector on 24.5% and the primary sector on 4.5% (2011).
New Zealand is a country heavily dependent on trade, particularly of commodity-based products, raw materials and capital equipments. Exports of make up over 30% of the GDP. This leaves New Zealand particularly vulnerable to slumps in commodity prices and global economic slowdown. Its principal export industries are agriculture, horticulture, fishing and forestry making up about half of the countries exports. Its major export partners are Australia 22.4%, US 11.3%, Japan 11.2%, China 9.7%, Germany 5.2% (2012). This is a dramatic change from 1965 when the United Kingdom received over half of New Zealand’s exports.
Traditionally, New Zealand enjoyed a high standard of living with stable commodity exports, based not least on a strong relationship with the United Kingdom. In 1973 the United Kingdom joined the then European Community and began to adhere to its trade policy and at the same time other factors such as the oil crises undermined the viability of the New Zealand economy. This led to a protracted and very severe economic crisis, during which living standards in New Zealand fell behind those of Australia and Western Europe.
Since 1984, successive governments have engaged in major macroeconomic restructuring, transforming New Zealand from a highly protectionist and regulated economy to a liberalised free-trade economy. Pursuant to this policy, during the late 1980s and early 1990s, the New Zealand Government sold a number of former government owned enterprises including its telecommunications company, railway network, a number of radio stations, and two financial institutions. However, the New Zealand Government continues to own a number of significant businesses, collectively known as State-Owned Enterprises (SOEs). These SOEs are operated through arms-length shareholding arrangements and are required to operate profitably, just like any privately-owned enterprises.
The current New Zealand government's economic objectives are centered on pursuing free-trade agreements and building a "knowledge economy". In 2004 the government began discussing a free trade agreement with the People's Republic of China, one of the first countries to do so. This was granted in 2008.
In recent years, New Zealand has been perceived as a vigorous economy and attracted international attention. After the economic restructuring of the 1980s, the New Zealand economy sank into a recession starting with the share market crash in October 1987. The recession deepened in the early 1990s when unemployment topped 10%. However in 1993 the economy rebounded smartly and apart from a smaller recession in the late 1990s, New Zealand enjoyed a substantial economic boom up until 2007 until the world financial crises put a dampener on world trade and finance.
Ongoing economic challenges for New Zealand include a current account deficit of 9% of GDP (), slow development of non-commodity exports, tepid growth of labour productivity, and an unofficial poverty rate of about twenty percent.