The Economy of New Zealand

New Zealand has an economy that is pretty impressive. This country, located in the South Pacific has a diverse economy. It has such assets such as agriculture, forestry, and energy industries. New Zealand’s economy has had some bumps along the way, of course. Nevertheless, New Zealand’s economy has potential for growth.

Recently, New Zealand’s economy has taken a few bad hits. The global financial crisis of 2008 is responsible for its economic woes. New Zealand’s hits have consisted of high fuel and food prices, high interest rates, and falling house prices. The year 2008 was very horrible for New Zealand.

Fortunately New Zealand’s government and Reserve Bank have undertaken a serious effort to combat the problem. The government cut personal income tax in October 2008. The new National government which took power in November 2008 cut income taxes even further on April 1, 2009. The Reserve Bank took the necessary steps to ensure that the country’s banks remained liquid. The government created infrastructure projects and assisted businesses by reducing compliance costs.

Fortunately not everything is doom and gloom. There has been some improvement in New Zealand’s economy.  Home prices have increased thanks to a combination of low fixed mortgage interest rates and increasing net migration. The gross domestic product has increased modestly, and private consumption has increased. The measures taken by the government and the Reserve Bank have obviously worked. All of this economic good news is in sharp contrast to the economy of the United States. All you hear is economic doom and gloom when it comes to the economy of the United States. The government and the Reserve Bank has done a pretty good job of improving the economy of New Zealand.

Despite these improvements, problems still remain. There has been a decline in business investment in plant and machinery. That must be very aggravating to the government. The economic climate is still a little shaky both in New Zealand and the global economic system.

New Zealand has a strong manufacturing base. The country has such diverse industries such as, food, metal products, machinery and equipment, and textile equipment. The manufacturing sector has experience highs and lows in recent years. The good news is that growth in the manufacturing sectors will increase. That will be some welcome news for the politicians who run the government.

New Zealand’s economy, is an economy that has a strong foundation. There have been some bumps on the road, but the economy will bounce back.

Sources:  www.treasury.govt.nz