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New Zealand Economy


New Zealand Economy

New Zealand Economy

New Zealand came out of the Second World War with a successful and expanding economy based on agriculture. During a period of complete employment which was sustained in the 50s and 60s, the gross domestic product of New Zealand increased at an annual average rate of four percent. Partly because of the Korean War, the wool industry experienced a boom which resulted in the high prices of agriculture.
Unfortunately there were signs of weakness in the economy even during this time.


The Economic and Monetary Council advised the State in 1962 that in the period from 1949 to 1960, the GDP of New Zealand had been one of the lowest among the world’s high ranking earning economies.
The late 60s saw the New Zealand government facing an increasing balance of problems in payment. Succeeding NZ governments grappled to maintain the high standard of living of the country by increasing the amount of borrowing from overseas sources and by increasing defensive policies in economics.

In 70s, the economic problems of New Zealand increased. Key world markets’ agricultural commodities access became difficult increasingly. In 1973 to 1974, there was a sharp oil prices increase which coincided with price falls taken from exports.

As with several countries of the OECD, New Zealand policies were primarily aimed at sustaining a high level of employment and activity in economics in the short term.


Levels of domestic industry protection were high and greatly challenged aggressiveness and the ability of the economy to adapt itself to the world’s changing environment.
Macro expansionary policies combined with assistance in the industry resulted in imbalances in macroeconomics, problems in structural adjustment, and fast increase of the indebtedness of the government.


The position of New Zealand further deteriorated in 1979 and 1980 after the succeeding major shift in commodity and oil prices.


Onwards from about 1984, New Zealand’s economic policy direction turned towards eradication of many kinds of assistance from the government and away from intervention.

On the level of macroeconomics, policies were geared towards achieving minimal inflation and a solid fiscal position while reforms for microeconomics were established to ready the economy to pressures of competition and global prices.

Included reforms were exchange rate floating, eradication of controls on the movements of capital, the termination of industry assistance, the ending of controls to price, deregulation of a large number of the economy’s sectors, privatization and corporation forming of assets owned by the state, and legislation of the labor market geared towards allowing more adaptable patterns of income bargaining.

After a time of weak growth in the period of the late 80s, the economic performance of New Zealand improved a lot during the 90s.

NZ Economy

The economy began to grow stronger from middle of 1991, with an exceptionally strong output during 1993 to 1996, with a yearly average increase in real gross domestic product peaking in June 1994 at 6.8 percent


This period of growth began to slow down in 1997 and 1998 because of the slowdown in important trading partners from Asia partnered with a drought that involved big parts of the nation during this period.



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