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COMPARISION OF NEW ZEALANDSS ECONOMY IN 1975 WITH 2010 BASED ON MACRO ECONOMIC VARIABLES

NEW ZEALAND ECONOMY New Zealand's economy has traditionally been based on a foundation of exports from its very efficient agricultural system. Leading agricultural exports include meat, dairy products, 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 sizable reserves of natural gas. Leading manufacturing sectors are food processing, metal fabrication, and wood and paper products. Since 1984, government subsidies including for agriculture have been eliminated; import regulations have been liberalized; exchange rates have been freely floated; controls on interest rates, wages, and prices have been 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. Economic growth, which had slowed in 1997 and 1998 due to the negative effects of the Asian financial crisis and two successive years of drought, rebounded in 1999. A low New Zealand dollar, favorable weather, and high commodity prices have boosted exports, and the economy is estimated to have grown by 2.5% in 2000. Growth is likely to slow in 2001 given the economic slowdown in important export markets. The return of substantial economic growth led the unemployment rate to drop from 7.8% in 1999 to 5.2% in mid-2001, the lowest rate in 13 years. The large current account deficit, which stood at more than 8% of GDP in 2000, has been a constant source of concern for New Zealand policymakers. The rebound in the export sector is expected to help narrow the deficit to lower levels. New Zealand's economy has been helped by strong economic relations with Australia. Australia and New Zealand 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 19% 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 initialed a free trade agreement with Singapore in September 2000 and is seeking other bilateral/regional trade agreements in the Pacific area. U.S. goods and services have been competitive in New Zealand, though the strong U.S. dollar has created challenges for U.S. exporters in 2001. The market-led economy offers many opportunities 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 prospects are for medical equipment, information technology, and general consumer goods. On the agricultural side, the best prospects are for fresh fruit, snack foods, specialized grocery items such as organic foods, and soybean meal. New Zealand welcomes and encourages foreign investment without discrimination. The Overseas Investment Commission (OIC) must give consent to foreign investments that would control 25% of more of businesses or property worth more than NZ$50 million. Restrictions and approval requirements also apply to certain investments in land and in the commercial fishing industry. In practice, OIC approval requirements have not been an obstacle for U.S. investors. OIC consent is based on a national interest determination, but no performance requirements are attached to foreign direct investment after consent is given. Full remittance of profits and capital is permitted through normal banking channels. 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 and a branch committee in Wellington.

GDP (Gross Domestic Product)

the gross domestic product (GDP) or gross domestic income (GDI) is one of the measures of national income and output for a given country's economy. GDP can be defined in three ways, all of which are conceptually identical. First, it is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time (usually a 365-day year). Second, it is equal to the sum of the value added at every stage of production (the intermediate stages) by all the industries within a country, plus taxes less subsidies on products, in the period. New Zealand Gross Domestic Product is worth 125 billion dollars or 0.20% of the world economy, according to the World Bank. From 1960 until 2009, New Zealand's average Gross Domestic Product was 39.48 billion dollars reaching an historical high of 134.68 billion dollars in December of 2007 and a record low of 5.18 billion dollars in December of 1968. Over the past 20 years the government has transformed New Zealand from an agrarian economy dependent on concessionary British market access to a more industrialized, free market economy that can compete globally. This dynamic growth has boosted real incomes - but left behind some at the bottom of the ladder - and broadened and deepened the technological capabilities of the industrial sector.

Ye ar 19 80 19 85 19 90 20 00 20

Gross Domestic Product (NZ$ millions) 22,976 45,003 73,745 114,563 154,108

1 US dollar exchange

Inflation index (2000=100 ) 30 53 84 100 113

Per capita income (as % of USA) 58.67 38.93 55.80 38.98 62.99

NZD 1.02 NZD 2.00 NZD 1.67 NZD 2.18 NZD 1.41

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INVESTMENT
New Zealand's net international liabilities were $161.0 billion, or 85.9 percent of GDP compared with 90.7 percent at 31 March 2009.New Zealand's foreign currency denominated external debt was $116.4 billion, of which 93.3 percent was hedged. New Zealand investment abroad of $127.6 billion was mostly in Australia and the United States

68.4 percent of the $288.6 billion of foreign investment in New Zealand was from Australia, the United Kingdom, and the United States. The value of investment from Japan and the United States was $9.4 billion lower than at 31 March 2009. Australian investment in New Zealand reached $100.0 billion for the first time.

Inflation
The inflation rate in New Zealand was last reported at 4.5 percent in the first quarter of 2011. From 1915 until 2010, the average inflation rate in New Zealand was 4.67 percent reaching an historical high of 44.00 percent in September of 1918 and a record low of -100.00 percent in June of 1915. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. This page includes: New Zealand Inflation Rate chart, historical data and news.

A basket of goods and servicesthat cost $1.00in quarter 4 of 1975would have cost $8.21in quarter 4 of 2010
Total percentage change Number of years difference Compound average annual rate Decline in purchasing power Index value for 1975 quarter 4 is Index value for 2010 quarter 4 is 721.4% 35.00 6.2% 87.8% 138.4 1137.0

Imports
n import is any good or service brought into one country from another country in a legitimate fashion, typically for use in trade. Import goods or services are provided to domestic consumers by foreign producers. An import in the receiving country is an export to the sending country. Imports, along with exports, form the basis of international trade. Import of goods normally requires involvement of the Customs authorities in both the country of import and the country of export and are often subject to import quotas, tariffs and trade agreements. when the "imports" are the set of goods and services imported, "Imports" also means the economic value of all goods and services that are imported. The macroeconomic variable I usually stands for the value of these imports over a given period of time, usually one year.

EXPORT
Export goods or services are provided to foreign consumers by domestic producers. It is a good that is sent to another country for sale. Export of commercial quantities of goods normally requires involvement of the customs authorities in both the country of export and the country of import. The advent of small trades over the internet such as through Amazon and e-Bay have largely bypassed the involvement of Customs in many countries due to the low individual values of these trades. Nonetheless, these small exports are still subject to legal restrictions applied by the country of export.

UNEMPLOYMENT RATE IN NEW ZEALAND

The labour force is defined as the number of people employed plus the number unemployed but seeking work. The participation rate is the number of people in the labour force divided by the size of the adult civilian noninstitutional population (or by the population of working age that is not institutionalised). The nonlabour force includes those who are not looking for work, those who are institutionalised such as in prisons or psychiatric wards, stay-at home spouses, kids, and those serving in the military. The unemployment level is defined as the labour force minus the number of people currently employed. The unemployment rate is defined as the level of unemployment divided by the labour force. The employment rate is defined as the number of people currently employed divided by the adult population (or by the population of working age). In these statistics, self-employed people are counted as employed. Natural rate of unemployment This is the summation of frictional and structural unemployment. It is the lowest rate of unemployment that a stable economy can expect to achieve, seeing as some frictional and structural unemployment is inevitable. Economists do not agree on the natural rate, with estimates ranging from 1% to 5%, or on its meaning some associate it with "non-accelerating inflation". The estimated rate varies from country to country and from time to time. The unemployment rate in New Zealand was last reported at 6.6 percent in the first quarter of 2011. From 1985 until 2010, New Zealand's Unemployment Rate averaged 6.25 percent reaching an historical high of 11.20 percent in September of 1991 and a record low of 3.50 percent in December of 2007. The labour force is defined as the number of people employed plus the number unemployed but seeking work. The nonlabour force includes those who are not looking for work, those who are institutionalised and those serving in the military.

The employment rate in1985 was 3.5 percent which increased to 5 % of the labour force in 2010.

POPULATION
The total population in New Zealand grew to 4.3 million in 2009 from 2.4 million in 1960, a 180

percent increase in just 50 years. New Zealand has 0.06 percent of the worlds total population which means that one person in every 1616 people on the planet is a resident of New Zealand. the population of the country in 1975 was 3.08 billion and 4.35 billon in 2010.

INTEREST RATES
The benchmark interest rate in New Zealand was last reported at 2.5 percent. In New Zealand, interest rates decisions are taken by the Reserve Bank of New Zealand. The official interest rate is the Official Cash Rate (OCR). The OCR was introduced in March 1999 and is reviewed eight times a year by the Bank. The OCR influences the price of borrowing money in New Zealand and provides the Reserve Bank with a means of influencing the level of economic activity and inflation. ,From 1985 until 2010, New Zealand's average interest rate was 8.75 percent reaching an historical high of 67.32 percent in March of 1985 and a record low of 2.50 percent in April of 2009.

the interest rate in 1985 was 20% and in 2010 it reduced drastically to 2.5%.

INDUSTRIAL PRODUCTION
Industrial Production is an economic report that measures changes in output for the industrial sector of the economy. The industrial sector includes manufacturing, mining, and utilities. Although these sectors contribute only a small portion of GDP (Gross Domestic Product), they are highly sensitive to interest rates and consumer demand. This makes Industrial Production an important tool for forecasting future GDP and economic performance. Industrial Production figures are also used by central banks to measure inflation, as high levels of industrial production can lead to uncontrolled levels of consumption and rapid inflation. Industrial Production in New Zealand remained unchanged in the third quarter of 2010. Industrial production measures changes in output for the industrial sector of the economy which includes manufacturing, mining, and utilities. Industrial Production is an important indicator for economic forecasting and is often used to measure inflation pressures as high levels of industrial production can lead to sudden changes in prices. From 1977 until 2010, New Zealand's industrial production averaged 80.79 percent reaching an historical high of 100.80 percent in September of 2005 and a record low of 58.60 percent in December of 1977.

BALANCE OF TRADE-

New Zealand reported a trade surplus equivalent to 605 Million NZD in May of 2011. New Zealand is greatly dependent on international trade. New Zealand's economy has traditionally been based on a foundation of exports from its very efficient agricultural system: meat, dairy products, forest products, fruit and vegetables, fish, and wool. New Zealand imports mainly machinery and equipment, vehicles and aircraft, petroleum, electronics, textiles and plastics. Its main trading partners are: Australia, European Union, The United States, China and Japan.

New Zealand Dollar Exchange Rate Chart (NZDUSD)

The New Zealand Dollar exchange rate (NZDUSD) appreciated 19.23 percent during the last 12 months. The New Zealand Dollar spot exchange rate specifies how much one currency, the NZD, is currently worth in terms of the other, the USD. While the New Zealand Dollar spot exchange rate is quoted and exchanged in the same day, the New Zealand Dollar forward rate is quoted today but for delivery and payment on a specific future date.

CONCLUSION
Over t he past 20 years t he gover nment has t ransfor med New Zealand fro m an agrar ian eco no my dependent on concessio nar y Br it ish market access t o a mo re indust r ialized, free market economy t hat can co mpet e glo bally. This d yna mic growt h has boost ed real inco mes - but left behind so me at t he bo ttom o f t he ladder - and broadened and deepened t he t echno logica l capabilit ies o f t he indust r ial sect or. Per capit a inco me rose for t en co nsecut ive years unt il 2007 in purchasing power par it y t erms, but fell in 2008-09. Debt -dr iven co nsumer spending drove robust growt h in t he fir st half o f t he decade, helping fuel a large balance o f pa yment s defic it t hat po sed a challenge for econo mic manager s. Inflat ionar y pressures caused t he cent ral bank t o raise it s key rat e st eadily fro m Januar y 2004 unt il it was amo ng t he highest in t he OE CD in 2007-08; int er nat io nal capit a l in flo ws at t ract ed to t he high rat es furt her st rengthened t he currency and ho using market , however, aggravat ing the current account defic it . The eco no my fell int o recessio n before t he st art of t he glo bal financial cr is is and cont ract ed for five consecut ive quart ers in 2008-09. I n line wit h g lo bal peers, t he cent ral bank cut int erest rat es aggressively and t he go ver nment developed fiscal st imulus measur es. The econo my post ed a 1.7% decline in 2009, but pulled out of recessio n lat e in t he year, and achieved 2.1% growt h in 2010. Nevert heless, key t rade sect ors remain vu lnerable t o weak ext ernal demand. The go ver nment plans t o raise pro duct ivit y growt h and develop infrast ruct ure, while reining in

go ver nment spending. There has been a t remendous differ ence in t he int er est rat es fro m 20% in 1975 t o 2.5 %in 2010. The value o f New Zealand do llar s has depreciat ed wit h respect to t hat in 1975.