New Zealand: Export-led shift

The economy has slowed over the course of the year, serving to eliminate excess demand pressures. The projected pick-up in the pace of activity is likely to be modest, as the shift towards export-led growth is hampered by the exchange rate appreciation since the middle of the year. Nevertheless, moderate real disposable income growth will allow private consumption to gently accelerate. Employment is projected to stabilise, but the rise in the unemployment rate will be attenuated by some labour market withdrawal.
The emerging negative output gap and dissipating inflationary pressures would allow room for significant monetary policy easing next year, which could also induce a currency depreciation and thereby reduce the external imbalance over time. But additional fiscal stimulus, whether in the form of tax cuts or additional spending, would reduce the room for lower interest rates and inhibit the transition to export-led growth. This would make the challenges of macroeconomic stabilisation more difficult at a time when the outlook is subject to considerable risks.
Population (000s), 20054 099
Area (000 sq km)269
GDP (Billion USD), 2005104.5
Life expectancy at birth (Women, Men), 2004 81.3, 77.0
Total labour force (000s), 20052 161
Government typeParliamentary Democracy
Indicators% change unless otherwise indicated
GDP growth1.51.32.0
Consumer price index3.62.82.0
Unemployment rate (%)
General government financial balance
(% GDP)
Current account balance (% GDP)-9.3-8.4-8.3
Source: OECD©OECD Observer No. 258/259, December 2006

Economic data

GDP growth: -1.8% Q1 2020/Q4 2019
Consumer price inflation: 0.9% Apr 2020 annual
Trade (G20): -4.3% exp, -3.9% imp, Q1 2020/Q4 2019
Unemployment: 8.4% Apr 2020
Last update: 9 July 2020

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