New Zealand

FY MBA – Macro Economics

Activity - 1

A Case Study on New Zealand

A Macro Economic Review.

Submitted to
Professor Hitesh Bhatia

School of Business and Law

Navrachana University, Vadodara

Prepared by:

Naina Lalwani (19531034)

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INDEX
Sr no. Table of Contents Page

1. About new Zealand 3

2. Country economic growth 4

3. Gross domestic product 5

4 Agriculture contribution in GDP 6

5 Manufacturing contribution in GDP 7-8

6 Servicing contribution in GDP 9

7 Population 10

8 Poverty 11

9 Unemployment 12

10 Inflation Rate 13

11 Natural resource 14-15

12 Exports of New Zealand 16-17

13 Imports of New Zealand 18-19

14 Currency exchange rate 20

15 Other information (Tourism industry) 21

16 Reference 22

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New Zealand is a sovereign island country in the south western Pacific Ocean. The country
has two main landmasses—the North Island , and the South Island —and around
600 smaller islands. It has a total land area of 268,000 square kilometres (103,500 sq. mi).

A developed country, New Zealand ranks highly in international comparisons of national

performance, such as quality of life, health, education, protection of civil liberties, and
economic freedom. New Zealand underwent major economic changes during the 1980s,
which transformed it from a protectionist to a liberalised free-trade economy. The service
sector dominates the national economy, followed by the industrial sector, and agriculture;
international tourism is a significant source of revenue.

New Zealand has an advanced market economy, ranked 16th in the 2018 Human
Development Index and 3rd in the 2018 Index of Economic Freedom. It is a high-income
economy with a nominal gross domestic product (GDP) per capita of US$36,254. The
currency is the New Zealand dollar, informally known as the "Kiwi dollar".

New Zealand is heavily dependent on international trade, particularly in agricultural

products. Exports account for 24% of its output, making New Zealand vulnerable to
international commodity prices and global economic slowdowns.

English is the predominant language in New Zealand, spoken by 96.1% of the population.
New Zealand English is similar to Australian English and many speakers from the Northern
Hemisphere are unable to tell the accents apart.

New Zealand has an adult literacy rate of 99%, and over half of the population aged 15 to
29 hold a tertiary qualification. The OECD's Programme for International Student
Assessment ranks New Zealand's education system as the seventh best in the world, with
students performing exceptionally well in reading, mathematics and science.

Net migration increased after the Second World War; in the 1970s and 1980s policies were
relaxed and immigration from Asia was promoted. The population has become more diverse
in recent decades: in 1961, the census reported that the population of New Zealand was
92% European and 7% Māori, with Asian and Pacific minorities sharing the remaining 1%.

New Zealand is a predominantly urban country, with 73.7% of the population living in the
seventeen main urban areas (i.e. population 30,000 or greater) and 54.4% living in the four
largest cities of Auckland, Christchurch, Wellington, and Hamilton. New Zealand cities
generally rank highly on international liveability measures.

Most international visitors arrive via air and New Zealand has six international airports, but
currently only the Auckland and Christchurch airports connect directly with countries other
than Australia or Fiji.

As of 2017, the United Nations International Telecommunication Union ranks New Zealand
13th in the development of information and communications infrastructure.

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Economic growth
New Zealand has an advanced market economy, highly dependent on international trade.
The country is closely link with Australia, which is the biggest importer of “kiwi” products,
supplier and investor. New Zealand’s most developed industries are focused on tourism and
exports of agricultural products and are the main source of growth. Services are the biggest
sector of the economy and account for 75 per cent of total GDP including: finance, insurance
and business services (30 per cent); personal and community services (13 per cent), and
transport and communication (11 per cent). Industry accounts for 17 per cent of GDP with
manufacturing constituting 13 per cent and construction 4 per cent. Agriculture, fishing,
forestry and mining accounts for the remaining 8 per cent.

*economic growth rate half yearly

New Zealand’s GDP expanded 0.7 percent on quarter in the three months to September
2019, up from a 0.1 per cent advance in the previous period to beat market expectations of
a 0.6 per cent rise. It was the fastest quarterly growth rate since the last quarter of 2018,
nudged by retail activity, amid higher spending on electronics such as appliances, mobile
phones, and computers. Other significant positive contributions came from information &
communication; professional, scientific, technical, admin, and support (0.7% after showing
no growth); manufacturing (0.6 per cent); construction (0.6 per cent) and agriculture (1.5
per cent). On annual basis, activity rose 2.3 per cent following a 2.1 per cent expansion.

New Zealand to stand at 0.70 in 12 months’ time. In the long-term, the New Zealand GDP
Growth Rate is projected to trend around 0.60 per cent in 2020.

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Gross domestic product

The gross domestic product (GDP) measures of national income and output for a given
country's economy. The gross domestic product (GDP) is equal to the total expenditures for
all final goods and services produced within the country in a stipulated period of time.

The Gross Domestic Product (GDP) in New Zealand was worth 205.02 billion US dollars in
2018. The GDP value of New Zealand represents 0.33 percent of the world economy.

*GDP YEARLY

GDP in New Zealand is expected to be 219.00 USD Billion by the end of this quarter In the long-term,
the New Zealand GDP is projected to trend around 230.00 USD Billion in 2020.

New Zealand GDP Last Previous

GDP Growth Rate 0.70 0.10 (percentage)
GDP Annual Growth Rate 2.30 2.10 (percentage)
GDP 205.02 202.59 (USD Billion)
* Note: Real GDP is calculated based on 2009/10 price.

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Agriculture contribution in GDP

GDP From Agriculture in New Zealand increased to 3383 NZD Million in the third quarter of
2019 from 3334 NZD Million in the second quarter of 2019.

*contribution of agriculture in GDP half yearly .

Agriculture is a major industry in New Zealand, contributing approximately 5% ($10.6 billion)

to the country’s Gross Domestic Product (GDP). The Primary Industries are also among our
country’s largest employers, directly employing an estimated 136,500 people with many
more employed in service and related industries. There was 13.9 million hectares of farming
land in New Zealand, of which 7.8 million hectares is in grassland, 2.4million hectares is in
tussock, 1.6 million hectares is in plantations and 2.1 million hectares is in other land. There
are approximately 55,250 holdings in New Zealand, with an average size of 252 hectares.

New Zealand dairy companies are trusted suppliers of a full range of dairy products,
including fresh milk, milk powder, high-value dairy nutritional products, specialised dairy
ingredients for food service, and infant formulas.

Facts about the dairy companies:-

o New Zealand accounts for 3% of total world production of dairy;

o New Zealand exports about 95% of its dairy production;
o New Zealand's top four dairy export products are: whole milk powder (37%), cheese
(12%), skim milk powder (10%), and butter (9%); and
o Protein products, UHT milk, and infant formula accounted for 21% of New Zealand
dairy exports.

GDP From Agriculture in New Zealand is expected to be 3364.00 NZD Million by the end of
this quarter. Looking forward, we estimate GDP From Agriculture in New Zealand to stand at
3468.00 in 12 months time. In the long-term, the New Zealand GDP From Agriculture is
projected to trend around 3657.00 NZD Million in 2020.

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Manufacturing contribution in GDP

GDP From Manufacturing in New Zealand increased to 6106 NZD Million in the third quarter
of 2019 from 6070 NZD Million in the second quarter of 2019.

GDP From Manufacturing in New Zealand is expected to be 6194.00 NZD Million by the end of
this quarter. Looking forward, we estimate GDP From Manufacturing in New Zealand to stand at
6259.00 in 12 months time. In the long-term, the New Zealand GDP From Manufacturing is
projected to trend around 6601.00 NZD Million in 2020.

Manufacturing in New Zealand: Key points

 Most goods that new Zealand use in our lives are manufactured.
 Manufacturing is a key driver of economic development.
 The manufacturing sector includes a diverse range of activities and enterprises,
grouped into seven subsectors for this report
 The ‘food and beverage’ subsector makes up 32% of all manufacturing output, the
largest of all manufacturing subsectors.
 New Zealand’s small domestic population and geographic isolation have shaped the
development and structure of the manufacturing sector.
 Technological change and the reduction of trade barriers are driving change in New
Zealand manufacturing today.

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Servicing contribution in GDP

GDP From Services in New Zealand increased to 42617 NZD Million in the third quarter of
2019 from 42428 NZD Million in the second quarter of 2019.

GDP From Services in New Zealand is expected to be 42532.00 NZD Million by the end of
this quarter

Looking forward, we estimate GDP From Services in New Zealand to stand at 43682.00 in 12
months time. In the long-term, the New Zealand GDP From Services is projected to trend
around 46073.00 NZD Million in 2020.

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Population
In June 2018, New Zealand has an estimated population of 4,841,000,[15] up from the 4,027,947
recorded in the 2006 census
The population of New Zealand represents 0.06 percent of the world´s total population
which arguably means that one person in every 1585 people on the planet is a resident of
New Zealand.

Population pyramid taken from the 2013 census

Population 4,841,000 (Stats NZ 2017 estimate)
Density 18.1/km2 (46.9/sq mi)
Growth rate 2.1% (Stats NZ projection)
Birth rate 12.43 per 1000 pop.
Death rate 6.95 per 1000 pop.

Life expectancy
• male 79.9 years
• female 83.4 years
Fertility rate 1.81 births per woman
Infant mortality rate 3.87 per 1000 live births
Net migration rate 14.72 per 1000 pop.

Current vital statistics

Births from January to September 2019 = 44,868
Deaths from January to September 2019 = 25,974
Natural growth from January to September 2019 = 18,894

Every year population seems to be increasing at increasing rate.

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Poverty

Poverty as defined in New Zealand are the households that make less than 60 per cent of
the median disposable income.
So think about that. It means no matter how rich the country is and no matter how high the
median household we will always have a class of people that are described as living in
poverty.

In 2017, research by the Child Poverty Monitor found that 290,000 NZ children - around
27% of kids - were living in income poverty.

UNICEF defines child poverty as children being deprived of the material, spiritual and
emotional resources needed to survive, develop and thrive.
This leaves them unable to enjoy their rights, achieve their full potential or participate as full
and equal members of society.

About one in six children (16% or 183,000) live below a before-housing-cost relative poverty
measure, but that figure jumps to almost one in four (23% or 254,000) once housing costs
are accounted for. And 13% (148,000) are living in households that experience material
hardship – 6% in severe hardship. These children don’t have such basic things as two good
pairs of shoes. Their families regularly have to cut back on fresh fruit and veggies, put up
with feeling cold and postpone visits to the doctor.

*Income poverty
Living in income poverty can mean homelessness, not having access to healthy food like
fruits and vegetables, going to school hungry, or coming home to a cold damp house to
sleep in a shared bed. It can mean missing out on activities like learning a musical instrument
or playing sport, or even having a birthday party.

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Unemployment
In New Zealand, the unemployment rate measures the number of people actively looking for a
job as a percentage of the labour force.

Quarterly 4.2% (September 2019 quarter)

Quarterly change, percentage points (+0.3) (September 2019 quarter)

Number of unemployed people 115,000 (September 2019 quarter)

Unemployment rate by sex, seasonally adjusted

Quarter Men Women Total

Mar-18 4 4.8 4.3
Jun-18 4.3 4.7 4.5
Sep-18 3.9 4.1 4
Dec-18 4.4 4.2 4.3
Mar-19 3.9 4.4 4.2
Jun-19 3.6 4.3 3.9
Sep-19 3.8 4.6 4.2

Unemployment Rate in New Zealand is expected to be 4.30 percent by the end of this
quarter. Looking forward, we estimate Unemployment Rate in New Zealand to stand at 4.20
in 12 months time. In the long-term, the New Zealand Unemployment Rate is projected to
trend around 4.00 per cent in 2020.

New Zealand's Population reached 4.89 million people in Dec 2018. Monthly Earnings of
New Zealand stood at 3,259.97 USD in Sep 2019. The country's Labour Force Participation
Rate increased to 70.00 % in Sep 2019.

Employment rate 67.5% Quarterly (September 2019 quarter)

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Inflation Rate

Annual inflation rate in New Zealand increased to 1.9 percent in the last quarter of 2019
from 1.5 percent in the previous three months. It is the highest inflation rate in one year,
above market expectations of 1.8 percent. Biggest upward pressure came from cost of
housing and household utilities (3 percent), with rentals for housing up 3.1 percent, the
most since the third quarter of 2008, property rates and related services up 5.0 percent, and
purchase of housing up 2.4 percent. Food prices increased 2.5 percent, with restaurant
meals and ready-to-eat food up 3.4 percent. Alcoholic beverages and tobacco increased 4.9
percent, with cigarettes and tobacco up 9.1 percent. On a quarterly basis, consumer prices
rose 0.5 percent over the previous period, below 0.7 percent in the September quarter.

Calculation of inflation rate -The consumers price index (CPI) measures the changing
price of the goods and services New Zealand households buy. It provides a measure of
inflation.

In New Zealand, the most important category in the consumer price index is Housing and
Utilities (24.2 percent of total weight). Food and Non-Alcoholic Beverages accounts for 18.8
percent; Transport for 15 percent; Recreation and Culture for 9.4 percent; Miscellaneous
Goods and Services for 7.4 percent and Alcoholic beverages and Tobacco for 7 percent.
Furniture, Household Goods and Maintenance; Clothing and Footwear; Health;
Communication and Education account for the remaining 18.2 percent of total weight.

Inflation Rate in New Zealand averaged 4.64 percent from 1918 until 2019, reaching an all
time high of 44 percent in the third quarter of 1918 and a record low of -15.30 percent in
the first quarter of 1923.

Inflation Rate in New Zealand is expected to be 2.00 percent by the end of this
quarter.Looking forward, we estimate Inflation Rate in New Zealand to stand at 1.90 in 12
months time. In the long-term, the New Zealand Inflation Rate is projected to trend around
2.00 percent in 2020.

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Natural resource

New Zealand’s natural resources include gold, silver, natural gas, iron ore, coal, and
limestone. Despite having a variety of mineral resources, the production of the country’s
mineral industry is lesser than that of its neighbour Australia. The total exports of New
Zealand were valued at $32.2 billion and total imports were valued at US$31.4 billion
Australia continues to be New Zealand’s main import and export trading partner.

The metallic mineral occurrences in New Zealand include silver, gold, iron, chromium,
copper, gallium, lead, lithium, magnetite, manganese, mercury, molybdenum, nickel,
platinum-group metals, rare earths, tin, antimony, bauxite, zinc, beryllium, titanium,
tungsten, and uranium. However, only gold, iron, and silver were produced. Production of
other metallic minerals would be undertaken by the country only if it is economically
feasible and prices are favourable.

New Zealand is actually ‘the luckiest country’ in terms of natural

resources per capita..

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*Locations of metallic mineral occurrences, excluding gold.

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Exports of New Zealand

New Zealand’s economy is greatly dependent on international trade. It’s been based
traditionally on exports from its very efficient agricultural system. The country exports
mainly dairy produce, birds' eggs, natural honey, edible products of animal origin (24
percent of total exports), meat and edible meat offal (14 percent), wood and articles of
wood (7 percent), fruit and nuts, peel of citrus fruit or melons (5 percent) and beverages,
spirits and vinegar (4 percent). The main export partners are China (18 percent of total
exports), Australia (17 percent), the US (12 percent), Japan (6 percent), the UK and South
Korea (3 percent each).

Exports from New Zealand surged 7.6 percent over a year earlier to NZD 5,228 million in
November 2019, after rising 3.7 percent in October, mainly by driven by higher sales of milk
powder, butter, and cheese (23.7 percent to NZD 1817 million). Also, sales of meat & edible
offal jumped 15.7 percent to NZD 636 million. In contrast, sales of fruit plunged 23.7 percent
to NZD 66 million. Among main trade partners, exports rose to China (35.6 percent), while
declined to the US (-6.3 percent), Australia (-5.2 percent) and Japan (-3.0 percent).

* quarterly exports of new Zealand

New Zealand Exports Rise 4.3% YoY in October

Exports from New Zealand went up 4.3 percent over a year earlier to NZD 5035 million in
October 2019, after a 2.6 percent rise in the previous month, driven by higher sales of milk
powder, butter, and cheese (+19.7 percent to NZD 1471), in particular milk powder (+32
percent). Also, sales of meat & edible offal jumped 29.4 percent to NZD 580 million,
namely lamb (+27 percent) and beef (+39 percent). In contrast, sales of fruit plunged 23.1
percent to NZD 156 million, led by green kiwifruit (-38 percent). Among main trade partners,
exports rose to China (22.8 percent), and the US (4.2 percent); but dropped to the EU (-20.6
percent).
Exports in New Zealand is expected to be 5300.00 NZD Million by the end of this quarter.
Looking forward, it is estimated Exports in New Zealand to stand at 4900.00 in 12 months
time. In the long-term, the New Zealand Exports is projected to trend around 5300.00 NZD
Million in 2020

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Product wise export

Product UD $ percentage of export
1. Dairy, eggs, honey: US$10.2 billion (26.5% of total exports)

2. Meat: $5.2 billion (13.5%)

3. Wood $3.6 billion (9.4%)

4. Fruits, nuts: $2.2 billion (5.8%)

5. Beverages, spirits, vinegar: $1.4 billion (3.5%)

6. Cereal/milk preparations: $1.3 billion (3.3%)

7. Fish: $1.1 billion (2.9%)

8. Machinery including computers: $1 billion (2.7%)

9. Aluminum: $850.9 million (2.2%)

10. Miscellaneous food preparations: $842.9 million (2.2%)

* highest dollar value in global shipments from New Zealand during 2018.

New Zealand Exports By Country Value

China $9.65B
Australia $6.34B
United States $3.83B
Japan $2.42B
South Korea $1.21B
United Kingdom $1.07B
Singapore $881.16M
Other Asia, nes $834.68M
Hong Kong $789.35M
Malaysia $711.70M

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Imports of New Zealand

New Zealand imports mainly vehicles (13 percent), nuclear reactors, boilers, machinery and
mechanical appliances (13 percent), fuels (10 percent), electrical machinery and equipment
(8 percent), plastics (4 percent) and aircraft, spacecraft (4 percent). Its major import
partners are: China (20 percent of total imports), Australia and the US (12 percent each),
Japan (7 percent), Germany (5 percent), Thailand and South Korea (4 percent each).

Imports to New Zealand rose 2 percent from a year ago to NZD 5,981 million in November
2019, after declining 1.4 percent in October, boosted by purchases of mechanical machinery
& equipment (12.7 percent to NZD 879 million); vehicles, parts & accessories (10 percent to
NZD 709 million) and oil & related products (5 percent to NZD 604 million). In contrast,
acquisitions fell mostly for electrical machinery & equipment (-0.7 percent to NZD 558
million); textiles & textiles articles (-4.3 percent to NZD 239 million) and plastic & plastic
articles (-7.8 percent to NZD 224 million). By destination, imports increased mainly from
China (1.9 percent), the US (18 percent), Japan (14.8 percent) and Germany (5.3 percent). In
contrast, purchases from Australia decreased 6.1 percent.

Imports in New Zealand is expected to be 5400.00 NZD Million by the end of this quarter.
Looking forward, its estimated Imports in New Zealand to stand at 6100.00 in 12 months
time.
In the long-term, the New Zealand Imports is projected to trend around 5400.00 NZD
Million in 2020.

New Zealand Imports Drop 1.4% YoY in October

Imports to New Zealand fell 1.4 percent year-on-year to NZD 5774 million in October 2019,
following a 2.6 percent decline in the previous month, mainly due to lower purchases of
vehicles, parts & accessories (-9.4 percent to NZD 656 million) and pharmaceutical products
(-13.5 percent to NZD 124 million). In contrast, purchases of mechanical machinery and
equipment jumped 9.7 percent to NZD 947 million and those of electrical machinery and
equipment 6.9 percent to NZD 581 million.

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Products US $ % imports
1. Vehicles: US$6.3 billion (14.4% of total
imports)

2. Machinery including computers: $6 billion (13.8%)

3. Mineral fuels including oil: $5.2 billion (12%)

4. Electrical machinery, equipment: $3.5 billion (8.1%)

5. Plastics, plastic articles: $1.6 billion (3.7%)

6. Optical, technical, medical apparatus: $1.2 billion (2.8%)

7. Pharmaceuticals: $1 billion (2.3%)

8. Furniture, bedding, lighting, signs $871.3 million (2%)

9. Aircraft, spacecraft: $861.9 million (2%)

10. Articles of iron or steel: $842.1 million (1.9%)

* The following product groups represent the highest dollar value in New Zealand’s import purchases during 2018.

New Zealand Imports By Country Value

1. China $8.64B
2. Australia $5.02B
3. United States $4.42B
4. Japan $3.04B
5. Germany $2.21B
6. South Korea $2.00B
7. United Arab Emirates $1.99B
8. Thailand $1.92B
9. Singapore $1.48B
10. Malaysia $1.45B
11. United Kingdom $1.25B

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Currency exchange rate

1 New Zealand Dollar equals 47.14 Indian Rupee

(NZD) (INR)

1 New Zealand Dollar equals 0.66 United States Dollar

(NZD) (USD)

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Other information

Tourism industry

 Total tourism expenditure was $40.9 billion, an increase of 4 percent ($1.6 billion)
from the previous year.
 International tourism expenditure increased 5.2 percent ($843 million) to $17.2
billion, and contributed 20.4 percent to New Zealand’s total exports of goods and
services.
 The number of short-term arrivals to New Zealand increased 1.3 percent over the
same period.
 Tourism generated a direct contribution to gross domestic product (GDP) of $16.2
billion, or 5.8 percent of GDP.
 Tourism is our biggest export industry, contributing 21% of foreign exchange
earnings.
 The indirect value added of industries supporting tourism generated an additional
$11.2 billion, or 4.0 percent of GDP.
 229,566 people were directly employed in tourism (8.4 percent of the total number
of people employed in New Zealand), an increase of 3.9 percent from the previous
year.
 Tourists generated $3.8 billion in goods and services tax (GST) revenue, with $1.8
billion coming from international tourists.

Culture of New Zealand

 The culture of New Zealand is essentially a Western culture influenced by the unique
environment and geographic isolation of the islands, and the cultural input of the
indigenous Māori people and the various waves of multi-ethnic migration which
followed the British colonisation of New Zealand.
 The kiwifruit is perhaps the most famous New Zealand fruit – sometimes known as
the Chinese gooseberry or simply the kiwi, it has a brown fuzzy skin and green or
yellow flesh inside.
 New Zealand is famous the world over for its incredible scenery, ranging from
sweeping mountains to vast underground cave systems, gigantic glaciers to boiling
hot springs, golden-sand beaches to rugged coastline. It's also packed with cool
cities, hidden spots, wonderful wildlife, and more.

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References

https://tradingeconomics.com/ new-zealand/indicators

http://www.worldstopexports.com/new-zealands

https://rogerkerr.wordpress.com/2010/10/22/friday-graph-natural-resources/

https://www.landcareresearch.co.nz/__data/assets/pdf_file/0009/77049/2_3_Chris
tie.pdf

https://en.wikipedia.org/wiki/Economy_of_New_Zealand#Unemployment

"NZ's child poverty rate one of highest". NZ Herald. The New Zealand Herald. 2
March 2005.

"Export Milestones". Statistics New Zealand.

New Zealand flag

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