Essay about New Zealand's Economy

817 Words Sep 29th, 2008 4 Pages
Economic Structure of New Zealand

New Zealand has a mixed economy which is mostly based on the free market principles. It is dependent on international trade with countries like Australia, USA, China, and Japan, and focused on specific sectors like tourism, agriculture, manufacturing, and financial services. Exporting goods and services takes about one third of real expenditure GDP. Some of the country’s natural energy resources include coal, natural gas and some oil reserves, geothermal fields, and climate conditions that are substantial for hydro-electric development. In 2007, power from renewable resources such as wind and water, accounted for 60% of total electricity production, and geothermal making up the rest of percentage,
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Those reforms and policies worked, and in late 80’s it showed small growth. Later the economy grew even more showing growth in average real GDP to 6.8% in 1994. After those years, country’s economy was growing moderately and accelerated in 2004 with the increases in oil prices. During the recent decade, New Zealand experienced some stable growth which lowered the inflation and unemployment rate, but not completely. New Zealand’s economy has been relatively successful, but the positive outlook involves some challenges. After the crisis in 1970’s, the country hasn’t fully recovered. For example, the GDP per capita is much less than in Spain and about 60% of USA. Income inequality increased, saying that a relatively big portion of people have quite good income. Also, the country have large current account deficit of about 9% of GDP, but the public debt is about 21% of GDP, which is still much smaller than some developed countries. The net foreign debt increased over the years 1984 until now, reaching NZD 182 billion. This could lead to the conclusion that the most of the foreign debt is concentrated in private sector, because income from agricultural exports and tourism doesn’t cover the imports of manufactured goods need to maintain the stable economy. High export price growth in 2008, exchange rate depreciation, and decreasing import growth will help current account deficit to decrease over the next 5 years. Inflation in the country increased over the

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