About New Zealand

AREA AND POPULATION

New Zealand is situated in the South Pacific Ocean, 6,500 km (4,000 miles) south-south-west of Hawaii and 1,900 km (1,200 miles) to the east of Australia. With a land area of 268,000 sq km (103,000 square miles), it is similar in size to Japan. It is comprised of two main adjacent islands, the North Island and South Island, and a number of small outlying islands. Because these islands are widely dispersed, New Zealand has a relatively large exclusive maritime economic zone of 3.1 million nautical sq km.

Over half of New Zealand’s total land area is pasture and arable land, and more than a quarter is under forest cover, including 1.9 million hectares of planted production forest. It is predominantly mountainous and hilly, with 13% of the total area consisting of alpine terrain, including many peaks exceeding 3,000 meters (9,800 feet). Lakes and rivers cover 1% of the land. Most of the rivers are swift and seldom navigable, but many are valuable sources of hydroelectric power. The climate is temperate and relatively mild.

The resident population of New Zealand at June 2003 is just over 4 million. With an estimated population of 1,291,000 people, the greater Auckland Region is home to almost 32 out of every 100 New Zealanders and is the fastest growing region in the country.

New Zealand has a highly urbanised population, with around 72% of the resident population living in urban entities with 10,000 or more people. Over half of all New Zealanders live in the five main urban areas of Auckland (1,199,500), Hamilton (179,000), Wellington (363,400), Christchurch (343,700) and Dunedin (113,800).

New Zealand is a sovereign state with a democratic parliamentary government based on the Westminster system. Its constitutional history dates back to the signing of the Treaty of Waitangi in 1840, when the indigenous Maori people ceded sovereignty over New Zealand to the British Queen. The Queen is represented in New Zealand by the Governor-General, appointed by her on the advice of the New Zealand Government. The New Zealand Constitution Act 1852 provided for the establishment of a Parliament with an elected House of Representatives. As a result of a referendum held in conjunction with the 1993 election, New Zealand has changed from a “First Past the Post” (FPP) system of electing Members of Parliament to a “Mixed Member Proportional” (MMP) system of proportional representation.

New Zealand has an open economy, which operates on free market principles. It has sizeable manufacturing and service sectors complementing a highly efficient agricultural sector. The economy is strongly trade-oriented, with exports of goods and services accounting for around 33% of total output.

Due to both good export performance and strong domestic demand, New Zealand’s economy grew by 3.6% for the March 2004 year. The economy is forecast to grow by 2.8%, 2.5% and 3.4% for the March financial years 2004/05, 2005/06 and 2006/07 respectively. Unemployment stands at 4.3% and the inflation rate is 1.5% for the March 2004 quarter.

PRIMARY INDUSTRIES

Agriculture

The agricultural sector, comprising the land, labour, capital and services involved in getting agricultural and horticultural products to the farm gate constitutes around 6% of GDP. The manufacture of primary foods accounts for a further 3% of GDP. The related downstream activities of processing, distribution and retailing of farm-processed products contribute around a further 16% of GDP.

The primary sector remains a major contributor to New Zealand's export earnings at over 50% of total exports.

The changing makeup of pastoral based production over the past 10 years reflects the relative returns of different farming types and stock numbers have changed in favour of dairy cows and deer. The Ministry of Agriculture & Forestry's Outlook for 2002 - 2006 forecasts that, over this period, the value of meat and dairy exports is expected to increase while wool exports will decline marginally.

Although agricultural commodities (including horticulture) still constitute New Zealand’s major exports, the past 10 years have seen changes in agricultural land use with low profitability in the sheep and beef sector prompting a conversion to dairy farming and forestry.

The move towards dairy farming has meant a continued reduction in sheep numbers from a peak of around 65 million in the late 1980s to 39.7 million in June 2003. Dairy cattle numbers have increased from 3.4 million in June 1990 to an estimated 5.106 million in June 2003, reflecting the good returns for dairy products over this time. Deer numbers remained stable at around 1.4 million through the mid-1990s, and have climbed to an estimated 1.7 million in June 2003. Beef cattle numbers peaked at around 5.2 million in June 1995. In June 2003, there were an estimated 4.644 million beef cattle.

Horticultural crops have become increasingly important, with principal crops being apples and kiwifruit. Other significant export crops include wine, onions, processed vegetables, squash and seeds. Horticultural land use has increased by 6% since 1994 to 110,000 hectares as at 30 June 2002. More land is being used for horticulture as the area planted in wine grapes continues to increase. The value of horticultural exports is estimated to be just over NZ$2 billion for the year ended March 2002.

The Ministry of Agriculture & Forestry's Outlook for 2002 - 2006 forecasts that, over this period, the value of kiwifruit exports should remain steady while the value of other horticultural exports will increase. Grapes and avocados are the fastest growing horticultural crops.

Forestry

Forestry and logging makes up around 1.4% of GDP and is the basis of an important export industry with more than 67% of wood from the planted production forests eventually being exported in a variety of forms including logs, wood chips, sawn timber, panel products, pulp and paper; and further manufactured wooden products including wooden furniture and components. The largest markets for forestry exports are Japan and Australia. The Republic of Korea, the United States, China and Taiwan and a range of Asian countries are important developing markets for New Zealand's forestry exports.

New Zealand’s climate and soils are well suited to the growth of planted production forests. The area planted in production forest has increased by more than a quarter since 1994 as marginal farming land is converted. Forestry activity uses 7% of New Zealand's total land area, and planted production forest covered 1.9 million hectares in 2002, up 26% since 1994. Radiate pine, which makes up 90% of the plantation estate, matures in 25 to 30 years, more than twice as fast as in its natural habitat of California. This species has had considerable research investment in New Zealand since it was introduced last century and has demonstrated its versatility for a wide range of uses.

In 2002 forestry exports totalled over NZ$2.3 billion. The wood supply from the planted production forest is expected to increase by more than 70% by 2010. The increase will more than double the volume of forestry product available for future export.

Fishing

New Zealand's Exclusive Economic Zone (EEZ) is one of the largest in the world at 1.3 million square nautical miles, an area 15 times the country’s land mass. The waters are relatively deep with less than one-third shallower than 1,000 metres – the depth where most fishing takes place. The waters support over 1,000 species of marine fish, about 100 of which are commercially significant.

Over the last decade, fishing has developed into a major New Zealand industry and export earner.  Approximately half of production is exported, the most important species being green-lipped mussels, hoki, mackerel, squid and tuna. Smaller volume but high value exports are rock lobster, abalone and orange roughy.  The main export markets are the United States, Japan and Australia.  New Zealand’s unpolluted coastal waters are also well suited to aquaculture, with main species farmed being Pacific oyster, green-lipped mussels and quinnat salmon. Planning is in train for farming new species over the next few years

Manufacturing

New Zealand’s manufacturing industries make an important contribution to the national economy. In the year ended March 2004, manufacturing sector output accounted for 10.16% of real GDP. The proportion of the labour force employed in manufacturing was around 15% in the year to March 2004.

As in the rest of the economy, major structural changes have occurred in the manufacturing sector since 1984. Tariffs have been systematically reduced, although tariff protection remains for few industries such as footwear, clothing and textiles. All quantitative controls on imported goods were phased out by July 1992. The current programme of tariff reductions saw tariffs halved in the period from July 1996 to July 2000, with further decreases planned before 2010.

Natural Resources

New Zealand has significant natural energy resources. There are large reserves of coal and natural gas, extensive geothermal fields, and a geographical structure which has supported substantial hydroelectric development. The main minerals mined, in addition to coal are limestone, iron sand, gold and sand and gravel for construction.

SERVICE SECTOR

Within the service sector, the trade, restaurants and hotels sector has been growing, with rising domestic incomes and strong tourism growth underpinning activity. At present, 67% of employment is in the service sector.

Accommodation, restaurants and hotels, which account for around 30% of service sector activity, have continued to enjoy relatively strong growth, benefiting from continued growth in international visitor arrivals as well as the trend for households to eat out more frequently.

The transport and communications industries have been particularly strong performers over recent times and appeared to be somewhat immune to the 1997/98 economic slowdown. Double-digit annual growth was recorded over much of 1999 and 2000. In part this reflects growth in the areas of cellular communications and internet services. Annual growth for the 2004 March year reached 4.5%.

Tourism

Tourism is one of the largest single sources of foreign-exchange revenue and a major growth industry in New Zealand. In the year ended March 2003, foreign-exchange earnings of NZ$7.4 billion were generated from international visitors (excluding New Zealand's share of international airfare payments), up 7% year-on-year. Total international visitor arrivals to the year end May 2004 totalled 2.2 million, up 8% year-on-year. The country's beautiful scenery, natural environment and a range of outdoor activities make New Zealand a popular tourist destination.

Australia is New Zealand's closest market and by far the largest source of visitor arrivals at 770,306 (35% of the total) in the year ending 31 May 2004. The next largest markets are the United Kingdom (277,488, or 13% of the total), the United States (212,962; 10%) and Japan (157,270; 7%).

While total Asia arrivals are still down on the levels that existed before the region's 1997/98 economic crisis, some countries, notably China, the Republic of Korea, Singapore and Thailand, have shown a resurgence of strong growth in the 12 months to May 2004. China (71,249) and Singapore (34,061) have already surpassed their 1997 arrival numbers. The Republic of Korea (118,379) has continued to recover rapidly over the last two years, but has some way to go to return to pre-crisis levels of 125,000 visitors.

Shipping

Around 85% of New Zealand's exports by value and 99% by volume are carried by sea. Foreign companies, including conference lines and arrangements such as vessel sharing agreements, carry the vast majority of this. Increased competition in recent years has seen greater participation by independent carriers. Benefits from the reform of New Zealand’s port industry have been realized through corporatisation and privatization of the ports and in lower stevedoring costs stemming from receptiveness to new technology, changes in conditions of employment and reduced manning levels. The number of waterside workers is estimated to have reduced by almost 60% following the implementation of reform legislation in may 1988. Ship turnaround times have halved and New Zealand exporters have been able to negotiate lower freight rates as a result of the savings derived from port reforms.

EXTERNAL SECTOR

External Trade

External trade is of fundamental importance to New Zealand. New Zealand remains reliant in exports of commodity-based products as a main source of export receipts and relies on imports of raw materials and capital equipment for industry, making New Zealand strongly trade orientated.

New Zealand strongly supports a reduction of worldwide trade barriers. Tariffs have been systematically reduced and quantitative controls on imported goods eliminated. Currently around 95% of goods come into New Zealand tariff free, including all goods from Least Developed Countries. Most of the remaining tariffs are in the textile, clothing and footwear sector.

New Zealand is an active participant in the current Doha Development round of WTO negotiations. Agriculture and services are of prime importance to the New Zealand economy and are already mandated for negotiation. New Zealand will be working with other like-minded countries to reduce barriers to trade in goods and services and provide improved market access for New Zealand exporters.

New Zealand, as a member of APEC, is committed to achieving APEC's goals of free trade and investment by 2010 for developed economies (2020 for developing economies). New Zealand continues to promote sound economic and financial policies in the APEC economies. Recent New Zealand initiatives have been the promotion of a Voluntary Action Plan for free and stable capital flows and initiatives to promote improved corporate governance. New Zealand has also put effort into capacity building and technical co-operation within APEC, and has encouraged greater involvement by organised labour.

New Zealand is ready to enter into discussions with any interested trading partners on the possibility of new preferential bilateral or regional free trade arrangements, provided such arrangements are outward looking and WTO-consistent. A Closer Economic Partnership Agreement with Singapore entered into effect on 1 January 2001 and negotiations are underway with Thailand and Chile on similar arrangements. Recently studies have been initiated regarding a Free Trade Agreement with China.

Merchandise Trade

The annual merchandise trade balance stood at a deficit of NZ$596 million for the year ended 31 March 2004, after being in surplus for much of 2002 and 2003. Merchandise goods exports fell 3.9% in the year to 30 April 2004 to NZ$28.6 billion. Merchandise goods imports grew by 2.6% to NZ$32.79 billion. The deficit is likely to diminish this year as price levels for exports increase and domestic demand levels off.

Trade in Services

Trade in services is dominated by tourist flows and the tourism industry is one of the most important sectors of the New Zealand economy.

The sharp rebound in tourists from Asia following 1998 and continued strong growth in tourist numbers from these markets, together with growth in the US and European markets, saw improvements in services exports. In the year March 2004, total visitor arrival numbers grew by 8% to 2.227 million.

The services balance recorded in the Balance of Payments has improved from a surplus of NZ$1.182 billion in the year to 31 March 2003 to a surplus of NZ$1.19 billion in the year to 31 March2004.

FOREIGN RELATIONS

New Zealand is a committed member of the international community of nations. This is demonstrated through New Zealand’s active participation in the United Nations. In recent years, foreign policy has focused increasingly on developing economic linkages with other countries - particularly those of the Pacific Rim. New Zealand maintains a multi-track trade policy: multi-lateral trade liberalization through the World Trade Organization (WTO): regional co-operation and liberalization through active membership of such fora as the Asia Pacific Economic Cooperation (APEC); and bilateral trade arrangements such as the Closer Economic Relations (CER) agreement with Australia and free trade agreements with Singapore and Thailand (the latter currently under negotiation). 

Asia-Pacific regional linkages remain at the core of New Zealand's political and economic interests. The countries of APEC take more than 70% of New Zealand's exports. They provide 70% of New Zealand's tourist visitors and 80% of New Zealand's investment. As well as these economic connections, people-to-people links between New Zealand and the wider Asia-Pacific region are extensive. Both within and outside the region, New Zealand's interests are well diversified. Australia (21%), North America (15.7%), the European Union (9.2%), and East Asia (25%) account for a large part of New Zealand's exports.

New Zealand makes an active contribution towards the security and economic well-being of the South Pacific region. It is a member of the Pacific Islands Forum and New Zealand’s Official Development Assistance is focused on the economic development of this region.

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