Economic trends
New Zealand's GDP dropped due to the global economy slowdown. The country had shown a negative growth during 18 months before its GDP became stable and restarted its growth again in 2010. This improvement was notably due to the establishment of an efficient monetary policy (a reduction of the key rate from 8.25% to 2.5%), an attractive fiscal policy, a strong increase of the migratory balance which stimulated the domestic demand, a small revival in the sectors of real estate and services for companies, as well as a stimulus plan aiming in particular at employment, education, tourism, telecommunications, building and infrastructures.
This activity was highly influenced by the dynamism of the primary sector, in particular by the fishing, forestry and mining industries. Traditionally, New Zealand's economic growth factors are domestic demand and exports. Its GDP per capita is in the process of catching up with the main western European economies ( USD 38,227 in 2011). However, unemployment started to increase again due to the economic crisis (6.4% in 2011).
The country was struck by two strong earthquakes in December 2010 and in February 2011and the cost of the reconstruction was estimated to be more than NZD 2 billion. At the beginning of 2011, the country experienced a strong appreciation of its currency, which had, as a consequence, a high increase in the cost of living. The inflation rate has also increased reaching an annual average of 5.3% in 2011. Nevertheless, the positive economic benefits from the Rugby World's Cup, the greatest sporting event that New Zealand has ever hosted, which took place in September and October 2011, should allow the country to reach a growth rate of more than 3% in 2012.
Main branches of industry
New Zealand is one of the smallest economies of the OECD and it is still heavily dependent on agricultural products. Agriculture represents New Zealand's main source of exports. The country produces 2% of the total global production of dairy products. The other main agricultural export products are meats, wood, fruits and fishing products. New Zealand also has a thriving wine industry. The country is rich in many natural resources, in particular, gas, oil and coal.
The industrial sector represents one-fourth of the GDP and employs nearly 20% of the workforce. Food processing, textiles and transportation equipment are among the main industries of the country.
The services sector accounts for more than two-thirds of the GDP and workforce. Tourism, which has been growing rapidly in recent years, is one of the country's most important sources of foreign-exchange revenues. The sectors of retail and wholesale trade, restaurants and hotels are major components of the economy of New Zealand, accounting for almost 25% of the services sector. The quality of the transport infrastructures plays an essential role in the country's economic growth.
International trade
Foreign trade is an essential element in New Zealand's economy, which is currently, one of the most open economies in the world. The share of foreign trade in its GDP represents more than 50%. The country's economy is very trade-oriented, with exports of goods and services accounting for 33% of the total output.
The main trade partners of New Zealand (both for imports and exports) are Australia (most of the merchandise circulates freely between the two countries), China, the United States and Japan. The main exports of the country are dairy products, meats, wool, machinery, fruits and peanuts. The main commodities imported are vehicles, machinery, mineral fuels and oil, electric and electronic equipment and plastics. The trade balance attained a surplus in 2009 due to the increase in milk exports and the drop in prices and volume of imports.
In 2010, New Zealand signed a free trade agreement with Malaysia and negotiations have begun in February 2011 to set up a free trade agreement between New Zealand, Russia, Belarus and Kazakhstan.
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