The New Zealand economy suffered a setback in the first quarter, with GDP only growing 0.2 percent, the slowest growth in two years. The downfall is attributed to slowdowns in the dairy industry and the mining sector.
New Zealand’s construction boom is a primary factor that is keeping the country out of economic recession. New Zealand has outpaced all other Organization for Economic Cooperation and Development (OECD) economies, and the nation has been the fastest growing OECD economy within the past year. The economy has grown at an annual 3.5 percent, and economists predict steady growth for the future.
Most experts suggest that New Zealand is not capable of enjoying the economic growth rates seen in other parts of the world. However, finance minister Bill English has assured economists that New Zealand will return to strength this year, after originally suggesting that the country would start to see improvement in 2014. At this point, New Zealand may be able to sustain long-term growth around 3% per annum without inflationary pressures or supply constraints.
New Zealand obviously does not enjoy the economic growth rates of Southeast Asia, let alone China. Nonetheless, indications were during 2014 that New Zealand could sustain long-term growth of 3 percent per annum without supply constraints and inflationary pressures. The thought was that the limit was little more than 2 percent.
So far 20 countries have taken up China’s open invitation to found the Asian Infrastructure Investment Bank (AIIB). Notably absent at the signing were Australia, Indonesia and South Korea, who did not definitively respond to the invitation. Until a week before the signing it seemed likely that Australia would join, but it eventually withdrew, citing ongoing transparency concerns similar to those voiced by US officials. The US likely sees the new bank as a threat to the US and Japan’s status as the regional norm-shapers of development finance.
New Zealand’s approach to regional affairs is unlikely to change with the recent re-election of Prime Minister John Key. The election, held on 20 September, provided a clear mandate for Key’s National Party. The routine three-yearly election was brought forward by a few weeks to provide certainty about who would represent New Zealand at the end-of-year meetings of APEC, the East Asia Summit, and the G20.
In previous reports, New Zealand’s economy has largely been considered one of the safest economies after emerging from the Global financial crisis largely unscathed. However, economists are now beginning to suggest that the growth boom could be wearing off and state that New Zealand’s economy could be on the rocks, once temporary growth factors disappear. This could cause a significant slowdown for this island nation.
Registered banks in New Zealand are being sued for overcharging $1 billion in default fees to more than 1 million customers over the last six years, in what may be the largest class action lawsuit in the nation’s history, reported the New Zealand Herald on Monday.
For many years, New Zealand relied heavily on the agrarian sector but in the past two decades, the focus has shifted to a more industrialized and open market economy. Because of this, the country is in a better position to compete on a global level. Another change experienced by New Zealand is the boost of real income, specific to a broader technological ability within the industrialized sector. However, for government officials overseeing the country’s economy, a few challenges have been experienced.
