New Zealand

GDP (US$ Billion)

200.84 (2017)

World Ranking 51/191

GDP Per Capita (US$)

41,629 (2017)

World Ranking 21/190

Economic Structure

(in terms of GDP composition, 2015)

Services
(65.6%)
Industry
(20%)
Agriculture
(5%)

External Trade (% of GDP)

52.5 (2016)

Currency (Period Average)

New Zealand Dollar

1.41 per US$ (2017)

Political System

Constitutional monarchy

Overview

New Zealand has an open, transparent economy where businesses and investors can generally make commercial transactions with ease. Major political parties are committed to an open trading regime and sound rule of law practices. Strong economic growth is largely driven by tourism, private consumption and construction activity. New Zealand is likely to remain one of the most stable states in the world over the coming decade, on the back of lower unemployment and expansionary fiscal measures to be offset by slowing export growth due to a weakening economic outlook across New Zealand’s main trading partners, namely Australia, Mainland China and the United States.

Sources: World Bank, Fitch Solutions

Major Economic/Political Events and Upcoming Elections

December 2016

Bill English became prime minister following the resignation of John Keys.

May 2017

A New Zealand-American company, Rocket Lab, launched its first test rocket into space, ushering New Zealand into the select group of countries which have carried out a space launch.

October 2017

There were inconclusive parliamentary elections. The Labour Party formed a coalition government with Jacinda Arden as prime minister.

April 2018

The hourly minimum wage was increased by 5%, effective April 1, 2018.

November 2018

The signing of the 'Crown Minerals Amendment Bill' into law in November 2018 imposed a ban on all new offshore oil and gas exploration in New Zealand’s waters, as part of its efforts to transition to a carbon-neutral economy by 2050.

December 2018

The government announced its intentions to raise the minimum wage by NZD1.2 from April 2019. This would take the minimum wage to NZD17.7 per hour, from the current NZD16.5.

Sources: BBC country profile – Timeline, Fitch Solutions

Major Economic Indicators
Graph: New Zealand real GDP and inflation
Graph: New Zealand real GDP and inflation
Graph: New Zealand GDP by sector (2016)
Note: 2016 is latest data available
Graph: New Zealand GDP by sector (2016)
Note: 2016 is latest data available
Graph: New Zealand unemployment rate
Graph: New Zealand unemployment rate
Graph: New Zealand current account balance
Graph: New Zealand current account balance

e = estimate, f = forecast

Sources: IMF, World Bank, Fitch Solutions

Date last reviewed: July 18, 2019

External Trade

4.1 Merchandise Trade

Graph: New Zealand current account balance
Graph: New Zealand current account balance

Sources: WTO, Fitch Solutions

Date last reviewed: July 18, 2019

Graph: New Zealand major export commodities (2018)
Graph: New Zealand major export commodities (2018)
Graph: New Zealand major export markets (2018)
Graph: New Zealand major export markets (2018)
Graph: New Zealand major import commodities (2018)
Graph: New Zealand major import commodities (2018)
Graph: New Zealand major import markets (2018)
Graph: New Zealand major import markets (2018)

Sources: Trade Map, Fitch Solutions

Date last reviewed: July 18, 2019

4.2 Trade in Services

Graph: New Zealand trade in services
Graph: New Zealand trade in services

Sources: WTO, Fitch Solutions

Date last reviewed: July 18, 2019

Trade Policies
  • New Zealand has been a member of the World Trade Organization (WTO) since January 1, 1995 and a member of the General Agreement on Tariffs and Trade (GATT) since July 30, 1948.


  • New Zealand and Australia trade through a Closer Economic Relationship (CER), which is a free trade agreement (FTA) eliminating all tariffs between the two countries. However, the rules of origin under the CER do not permit products to enter Australia duty free from New Zealand unless the products are of at least 50% New Zealand origin. Additionally, the last manufacturing process must be carried out in New Zealand. The enactment of the FTA between Australia and the United States in 2005 removed any tariff disadvantage to firms that choose to re-export products from New Zealand to Australia.


  • The vast majority of New Zealand's agricultural production is exported and no export subsidies are provided for agricultural products.


  • International vendors are to collect 15% goods and services tax (GST) on all sales valued at less than NZD1,000 (deemed low-value imported goods). However, customs agencies will continue to collect the relevant duties from the trading of goods falling above the price threshold of NZD1,000. Despite the implementation of the GST from October 1, 2010, the government is cutting import taxes on low-value goods to soften the impact for online shoppers, making certain items less expensive. The initial proposal had classified low-value imported goods as those items falling below NZD400.

Sources: WTO – Trade Policy Review, Fitch Solutions

Trade Agreement

6.1 Trade Updates

The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) could add between USD1.2 billion and USD4 billion to New Zealand's economy once fully implemented, according to government sources.

6.2 Multinational Trade Agreements

Active

  1. The Association of South East Asian Nations (ASEAN)-Australia-New Zealand Free Trade Area (AANZFTA): The AANZFTA came into force on January 1, 2010. AANZFTA is a comprehensive and single-undertaking FTA that opens up and creates new opportunities for the almost 700 million people of ASEAN, Australia and New Zealand. Through AANZFTA, tariffs will be progressively reduced and eliminated for at least 90% of all tariff lines by 2020. The movement of goods will be facilitated via simplified customs procedures and barriers to trade in services will be liberalised. New Zealand's major exports to ASEAN consist of dairy products (milk powder, butter and dairy spreads and cheese) while imports are largely crude and non-crude petroleum oils, biodiesel and commercial vehicles.


  2. New Zealand-Australia: New Zealand and Australia trade through a CER, which is an FTA eliminating all tariffs between the two countries. The CER came into force in January 1983. All tariffs and quotas were eliminated by 1990, five years ahead of schedule. New Zealanders and Australians are free to visit, live and work in each other's country under the Trans-Tasman Travel Arrangement. Furthermore, New Zealand and Australia have committed to creating a seamless Trans-Tasman economic environment, making it as easy for New Zealanders to do business in Australia as it is to do business in and around New Zealand. This is known as the single economic market, and builds on the foundation of the CER agreement.


  3. New Zealand-China: The FTA between New Zealand and China came into effect on October 1, 2008. Since the FTA was signed, goods exports to China have quadrupled. The FTA allows for duty free access for 96% of the categories of goods New Zealand exports to China. This represented about NZD115.5 million in annual savings to exporters at the time of signing, though these savings have substantially risen as trade has increased. New Zealand's major exports to China are dairy products, wood products and meat, while imports consist of electronics, clothing, furniture and toys. In November 2016, it was decided to upgrade the FTA, with the aim of increasing two-way trade to USD30 billion by 2020.


  4. New Zealand-Singapore: New Zealand and Singapore trade through a Closer Economic Partnership (CEP), which came into force on January 1, 2001 (less than a year after initial negotiations started) and covers both goods and services. Goods made in New Zealand or Singapore can be traded between the two countries duty free. In 2017, Singapore was the source market for 3.4% of New Zealand's imports and accounted for 2.1% of total exports. Singapore is also the base of many New Zealand businesses operating in South East Asia. In April 2017, the New Zealand and Singaporean foreign ministers announced that negotiations for an upgraded New Zealand-Singapore Enhanced Partnership would begin.


  5. New Zealand-Malaysia: The New Zealand-Malaysia FTA came into effect in August 2010 and covers both goods and services. Malaysia is New Zealand's sixth largest goods trading partner. On January 1, 2016 tariffs on 99.5% of New Zealand's exports to Malaysia were eliminated. New Zealand's major exports to Malaysia include dairy, malt extract, lamb and mutton, while imports centre on crude oil and oil cake.


  6. New Zealand-Hong Kong: New Zealand and Hong Kong signed a CEP which came into effect in January 2011. Major exports to Hong Kong are milk powder and malt extract, while New Zealand mainly imports telephones and cell phones from Hong Kong. Government procurement is included in the agreement, ensuring that New Zealand businesses can compete with Hong Kong businesses for government contracts on a level playing field. The CEP complements New Zealand's FTA with mainland China and enhances the potential for Hong Kong to be used as a platform for trade into mainland China.


  7. The CPTPP: The CPTPP has now been ratified by the required number of states (seven states, as of November 15, 2018) and entered into force on December 30, 2018. This agreement could add between NZD1.2 billion and NZD4 billion to New Zealand's economy once fully implemented. The other parties to the agreement (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore and Vietnam) account for 31% of New Zealand's goods and services exports and include four of New Zealand's top 10 trading partners (Australia, Japan, Singapore and Malaysia).

Under Negotiation

New Zealand-European Union (EU): Negotiations for a New Zealand-EU FTA formally launched in June 2018. Negotiations are expected to take between two and three years. Two-way trade between New Zealand and the EU is worth nearly NZD22 billion annually. Apart from the United States, the EU is New Zealand's largest trading partner with which it does not have an FTA. The EU includes five of New Zealand's top 20 trading partners (Germany, the United Kingdom, France, Italy and the Netherlands). In 2017 (latest data available), New Zealand imported NZD3 billion in services and NZD10.4 billion in goods from the EU and the United Kingdom. The EU accounts for approximately 15% of New Zealand's total trade in goods and services. New Zealand's main goods exports to the EU are agricultural products (particularly wine, fruit and meat), while services exports are dominated by tourism and transportation services.

Sources: WTO Regional Trade Agreements database, Government Websites, Fitch Solutions

Investment Policy

7.1 Foreign Direct Investment

Graph: New Zealand FDI stock
Graph: New Zealand FDI stock
Graph: New Zealand FDI flow
Graph: New Zealand FDI flow

Sources: UNCTAD, Fitch Solutions

Date last reviewed: July 18, 2019

7.2 Foreign Direct Investment Policy

  1. The New Zealand Trade and Enterprise (NZTE) is New Zealand's primary investment promotion agency, responsible for economic development and strengthening New Zealand's trade with the world. NZTE provides strategic advice, research and market intelligence for new exporters, as well as support for already established export companies. Export credit insurance is also available for exporting companies.


  2. New Zealand has an open economy that works on free market principles. Major political parties are committed to an open trading regime and sound rule of law practices and the country enjoys minimal corruption. This is regularly reflected in high global rankings in the World Bank's Ease of Doing Business report and Transparency International's Perceptions of Corruption Index.


  3. As part of its strategy, the New Zealand government aims to leverage existing offshore networks of the Ministry of Foreign Affairs and Trade (MFAT), NZTE, Immigration New Zealand (Immigration NZ), and Kea New Zealand (a New Zealand government business networking initiative) to generate investment leads.


  4. International firms currently employ about 20% of New Zealand's workforce.


  5. In May 2018, the government released a discussion document proposing the introduction of a research and development (R&D) tax credit on eligible expenditure for businesses undertaking R&D in New Zealand. By October 2018, the government introduced the incentive package, with the credit being proposed at 15% (with a minimum expenditure of NZD50,000 and a cap of NZD120 million). It is expected that the tax credit will be enacted in H119 and available for eligible expenditure incurred from April 1, 2019.


  6. Under its Business Growth Agenda, New Zealand aims to attract foreign investment in innovation-enhancing sectors to generate economic growth, create jobs and enhance productivity. The Investment Attraction Strategy targets investment in primary industries, premium food and beverage, specialised manufacturing, infrastructure, oil, gas and mining, ICT/digital and shared services sectors. The strategy includes cross-agency participation in initiatives that involve the Ministry of Business, Innovation, and Employment, the MFAT, the Ministry for Primary Industries, NZTE, Immigration NZ, and the New Zealand Treasury.


  7. New Zealand's Overseas Investment Office is responsible for administering the government's overseas investment policies and processing applications from overseas persons intending to invest in sensitive New Zealand assets, such as 'sensitive land' and 'significant business assets'. Both terms are defined in the Overseas Investment Act 2005.


  8. New Zealand has signed bilateral investment treaties with Argentina (August 1999), Chile (July 1999), mainland China (November 1988) and Hong Kong (July 1995). Only the treaties with mainland China and Hong Kong have entered into force.

Sources: WTO – Trade Policy Review, ITA, US Department of Commerce, Government Websites

7.3 Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive ProgrammeMain Incentives Available
Free trade zonesNew Zealand does not have any foreign trade zones or duty-free ports. The government, through its bodies such as Tourism New Zealand and NZTE, provides assistance in certain sectors such as tourism and the export of locally manufactured goods.
Sector incentives New Zealand has various incentives which are sector dependent.

Source: Fitch Solutions

Taxation – 2019
  • Goods and Services Tax: 15%
  • Corporate Income Tax: 28%

Source: Inland Revenue Department New Zealand

8.1 Business Taxes

Type of TaxTax Rate and Base
Corporate Income Tax28%
Capital Gains Tax0%

GST15%
Branch Tax Rate28%
Withholding TaxesNon-residents:

- Dividends 30%

- Interest 15%

- Royalties from patents, know-how, etc 15%

- Payments to contractors 15%

- Branch remittance tax 0%



Residents:

- Dividends 33%

- Interest 28%

Sources: Inland Revenue Department New Zealand, Fitch Solutions

Date last reviewed: July 18, 2019

Foreign Worker Requirements

9.1 Localisation Requirements

New Zealand residents and citizens should be considered for vacant roles before hiring individuals from overseas. Employers must provide evidence that no suitably qualified New Zealanders can perform the job offered to the foreign applicant. Exceptions exist for employers who are accredited with Immigration NZ and for some work visa categories, such as specific purpose work visas, essential skills work visas and work to resident talent (accredited employer) visas. Entrepreneurs and investors are eligible for special visas on a case-by-case basis.

9.2 Regional Exemptions

Citizens and permanent residents of Australia usually do not require a work permit, but the state has the right to request work visas in certain cases.

9.3 Visa/Travel Restrictions

In general, all visitors to New Zealand must apply for a visa to enter the country. Some exceptions to the general rule exist. Australian citizens and individuals who hold a current Australian permanent residence visa or a resident return visa do not need to formally apply for a New Zealand visa to enter the country. United Kingdom passport holders who produce evidence of the right to reside permanently in the United Kingdom can be granted a visitor visa for up to six months on arrival in New Zealand. Individuals from certain jurisdictions, including Hong Kong and Singapore, who will be in New Zealand for less than three months as a visitor, do not need to apply for a visa before travelling to New Zealand.

Sources: Government Websites, Fitch Solutions

Risks

10.1 Sovereign Credit Ratings



Rating (Outlook)Rating Date
Moody's

Aaa (Stable)

21/09/2017

Standard & Poor'sAA (Stable)

30/09/2011
Fitch Ratings

AA (Stable)

31/01/2019

Sources: Moody's, Standard & Poor's, Fitch Ratings

10.2 Competitiveness and Efficiency Indicators



World Ranking

201720182019
Ease of Doing Business Index

1/1901/1901/190

Ease of Paying Taxes Index

11/1909/19010/190
Logistics Performance Index

N/A15/160N/A
Corruption Perception Index

1/1802/180N/A
IMD World Competitiveness16/6323/6321/63

Sources: World Bank, IMD, Transparency International

10.3 Fitch Solutions Risk Indices



World Ranking
201720182019
Economic Risk Index RankN/A6/20210/202
Short-Term Economic Risk Score

70.471.775.8

Long-Term Economic Risk Score76.477.878.1
Political Risk Index RankN/A19/20218/202
Short-Term Political Risk Score82.782.784.0

Long-Term Political Risk Score85.885.885.8
Operational Risk Index RankN/A7/2017/201
Operational Risk Score77.477.577.4

Source: Fitch Solutions

Date last reviewed: July 18, 2019

10.4 Fitch Solutions Risk Summary

ECONOMIC RISK

The New Zealand economy is boosted by the country's low unemployment and strong fiscal health. Nevertheless, there appears to be growing dependence on its dairy exports to China, as well as a reliance on external financing, and the economy faces downside risks due to a still precarious property market.

OPERATIONAL RISK

New Zealand offers one of the most favourable business environments globally owing to the country’s low operational risks. Factors that boost New Zealand’s attractiveness as an investment destination include a highly skilled labour force, a highly developed logistics network, an open economy with few financial and trade barriers, together with a robust law enforcement apparatus that ensures a relatively crime-free environment.

Source: Fitch Solutions

Date last reviewed: July 22, 2019

10.5 Fitch Solutions Political and Economic Risk Indices

Graph: New Zealand short term political risk index
Graph: New Zealand short term political risk index
Graph: New Zealand long term political risk index
Graph: New Zealand long term political risk index
Graph: New Zealand short term economic risk index
Graph: New Zealand short term economic risk index
Graph: New Zealand long term economic risk index
Graph: New Zealand long term economic risk index

100 = Lowest risk; 0 = Highest risk

Source: Fitch Solutions Economic and Political Risk Indices

Date last reviewed: July 18, 2019

10.6 Fitch Solutions Operational Risk Index



Operational RiskLabour Market RiskTrade and Investment RiskLogistics RiskCrime and Security Risk
New Zealand Score77.4

73.775.772.1

88.3
Developed States Average72.4

64.671.376.377.4
Developed States Position (out of 27)5

59

191
Global Average49.650.349.8

49.049.2
Global Position (out of 201)7

6

14281

100 = Lowest risk; 0 = Highest risk

Source: Fitch Solutions Operational Risk Index

Graph: New Zealand vs global and regional averages
Graph: New Zealand vs global and regional averages
Country

Operational Risk Index

Labour Market Risk Index

Trade and Investment Risk IndexLogistics Risk IndexCrime and Security Risk Index
Denmark80.4

74.8

76.2

88.382.3
Netherlands78.465.9

78.2

88.680.7

Sweden78.067.7

78.187.578.6
Switzerland77.775.077.675.183.2
New Zealand77.473.775.772.188.3
United States77.281.3

75.382.969.3
Canada77.074.375.476.781.6
United Kingdom76.871.479.078.578.2
Norway76.264.072.280.887.9
Finland74.255.874.183.483.7
Ireland73.966.878.072.079.0

Austria73.760.871.980.581.5
Luxembourg72.854.277.680.079.3
Germany72.365.569.081.273.6
Australia72.067.872.168.379.9
Japan71.872.465.577.971.5
France71.860.171.183.272.8
Iceland71.460.667.269.688.1

Belgium71.358.272.883.271.1
Spain71.359.469.880.976.0
Liechtenstein70.759.878.161.583.2
Portugal69.451.766.580.978.4
Israel67.471.464.671.162.7
Isle of Man65.869.162.449.382.4
Malta64.654.969.060.873.7
Italy

63.754.559.776.264.3
Greece58.054.249.268.959.6

Developed Markets Averages72.464.671.376.377.4
Emerging Markets Averages46.948.645.447.4

46.1
Global Markets Averages49.650.349.849.049.2


100 = Lowest risk; 0 = Highest risk

Source: Fitch Solutions Operational Risk Index

Date last reviewed: July 18, 2019

Hong Kong Connection

11.1 Hong Kong’s Trade with New Zealand

Graph: Major export commodities to New Zealand (2018)
Graph: Major export commodities to New Zealand (2018)
Graph: Major import commodities from New Zealand (2018)
Graph: Major import commodities from New Zealand (2018)


Note: Graph shows the main Hong Kong exports to/imports from New Zealand (by consignment)

Date last reviewed: July 18, 2019

Graph: Merchandise exports to New Zealand
Graph: Merchandise exports to New Zealand
Graph: Merchandise imports from New Zealand
Graph: Merchandise imports from New Zealand

Note: Graph shows Hong Kong exports to/imports from New Zealand (by consignment)

Exchange Rate HK$/US$, average

7.75 (2014)

7.75 (2015)

7.76 (2016)

7.79 (2017)

7.83 (2018)

Sources: Hong Kong Census and Statistics Department, Fitch Solutions

Date last reviewed: July 18, 2019



2018

Growth rate (%)
Number of New Zealand residents visiting Hong Kong109,655

2.7

 2017Growth rate (%)
Number of New Zealand citizens residing in Hong Kong2,282

1.6

Sources: Hong Kong Tourism Board, United Nations Department of Economic and Socal Affairs - Population Division



2018

Growth rate (%)
Number of Asia Pacific residents visiting Hong Kong61,043,57612.0

 2017Growth rate (%)
Number of developed state citizens residing in Hong Kong65,680

1.6

Sources: Hong Kong Tourism Board, United Nations Department of Economic and Socal Affairs - Population Division

Date last reviewed: July 18, 2019

11.2 Commercial Presence in Hong Kong



2016

Growth rate (%)

Number of New Zealand companies in Hong Kong N/A   N/A
- Regional headquarters
- Regional offices
- Local offices



11.3 Treaties and agreements between Hong Kong and New Zealand

  • New Zealand has bilateral investment treaties (BITs) with mainland China (which entered into force on March 25, 1989) and Hong Kong (which entered into force on August 5, 1995) and these are the only BITs which the countries has that have entered into force. Besides these treaties, the country has concluded a number of economic agreements that contain provisions on investment.


  • The double taxation agreement (DTA) between New Zealand and mainland China entered into force on December 17, 1986 and was amended on March 22, 2000. New Zealand and Hong Kong entered into a DTA which came into effect on April 1, 2012. An update to the existing DTA between New Zealand and Hong Kong was signed in June 2017. The new protocol allows automatic and spontaneous exchanges of tax information. The amendement entered into force on August 9, 2018.

Sources: Fitch Solutions, UNCTAD, Inland Revenue Department

11.4 Chamber of Commerce or Related Organisations

The New Zealand Chamber of Commerce in Hong Kong

Address: 801 Winning House, 10-16 Cochrane Street, Central, Hong Kong

Email: exec.officer@nzcchk.com

Tel: (852) 5931 8841

Source: New Zealand Chamber of Commerce in Hong Kong

Hong Kong New Zealand Business Association

Email: hk@hongkong.org.nz

Tel: (64) 9 307 1216

Website: www.hongkong.org.nz

Please click to view more information.

Source: Federation of Hong Kong Business Association Worldwide

New Zealand Consulate General in Hong Kong

Address: 6501, Central Plaza, 18 Harbour Road, Wan Chai, Hong Kong

Email: nzcghkg@biznetvigator.com

Tel: (852) 2525 5044

Fax: (852) 2845 2915

Source: New Zealand Foreign Affairs and Trade

11.5 Visa Requirements for Hong Kong Residents

HKSAR passport holders and British National (Overseas) passport holders have visa-free access to New Zealand for short-term visits up to three months. Starting from 1 October 2019, visitors and transit passengers who are eligible for visa waiver (including holders of HKSAR passport) are required to hold a New Zealand Electronic Travel Authorization (NZeTA) before travelling to New Zealand. Please visit the website of the Government of New Zealand at www.immigration.govt.nz/nzeta for details and for the application arrangement.

Source: New Zealand Immigration

Image name View