Economic Analysis
New Zealand

New Zealand

Population 4.9 million
GDP per capita 41,205 US$
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  2017 2018 2019 (e) 2020 (f)
GDP growth (%) 2.6 2.8 2.5 -4.0
Inflation (yearly average, %) 1.9 1.6 1.4 1.9
Budget balance * (% GDP) 1.1 0.8 0.1 -0.1
Current account balance (% GDP) -2.9 -3.8 -4.1 -4.3
Public debt (% GDP) 31.6 29.8 29.6 30.0

(e): Estimate. (f): Forecast. *Fiscal year 2020: April 2019 -March 2020.


  • Proximity to Asia and Australia
  • Tourist appeal
  • Large and competitive agricultural sector (world's leading exporter of dairy products)
  • Balanced public accounts and contained public debt
  • Good corporate health: only 86 bankruptcies reported in 2018/2019 (lowest rate in 20 years)
  • Dynamic demographics thanks to immigration
  • High quality of life


  • Island nation
  • Dependency on foreign investment
  • High household and corporate debt levels (especially in agriculture)
  • Reliance on Chinese demand
  • Shortage of skilled labour
  • Housing shortage and soaring prices (+60% since 2008)
  • Lack of R&D and low labour productivity growth compared with other OECD countries


Solid growth

Growth is expected to remain robust in 2020, supported by accommodative monetary and fiscal policies. The central bank's policy rate, which reached a record low of 1.0% in August 2019, could be cut further to encourage inflation to increase to the upper half of the target range (1-3%). Private consumption (60% of GDP) is expected to grow only modestly, penalised by lower population growth (due to reduced immigration), a cooling housing market and household debt (about 160% of disposable income). However, it stands to benefit from higher real wages (thanks to low unemployment and minimum wage hikes in April 2019 and again in 2020) and support for public spending, as the 2019/2020 budget includes an increase in benefits.

Investment growth (domestic and foreign, 20% of GDP) is expected to slow as a result of low business confidence in government policy, labour costs and availability, and thin profit margins. In particular, the government's decision to curb immigration (by making it tougher for low-skilled workers and students to get visas, theoretically to reduce pressure on housing prices) raises concerns about a future labour shortage and is viewed as a populist measure. However, public investment, combined with favourable terms of trade and low interest rates, will mitigate these effects. Real estate investment should be supported by high demand, despite capacity constraints in construction.

Net exports are expected to contribute positively to growth, benefiting from the weakness of the New Zealand dollar, which should also constrain imports. However, as a small and very open economy, New Zealand would suffer from a global economic downturn. Agricultural products, in particular dairy and meat products, constitute the bulk of goods exports, leaving the external sector exposed to commodity price fluctuations and climatic hazards. The growth in demand for protein in developing economies – particularly in Asia, which accounts for half of exports – will support meat, dairy and horticultural product prices. Tourism, the leading export sector, should do well.


Strong fiscal position but an imbalanced current account

The 2019/2020 budget, which is the first-ever "well-being" budget, provides for an increase in public spending. The budget deficit, however, should be small, with the government still committed to keeping net debt below 20% of GDP by 2022. Social spending is the main expenditure item, including income tax exemptions for very low-income people and increases in family allowances. Investments are also expected in infrastructure and housing, including through the KiwiBuild programme. In addition, tax incentives for private investment in R&D will be extended, with the objective of increasing R&D to 2% of GDP.

The current account deficit is expected to remain stable, reflecting a structural income deficit (3% of GDP) linked to profit repatriations by foreign investors. The services surplus (1.5% of GDP), due in particular to tourism, will be offset by the trade deficit generated by substantial capital goods imports and currency depreciation. The current account deficit is mainly financed by portfolio investments and, to a more marginal extent, FDI, making the country vulnerable to capital outflows. External debt (more than 90% of GDP), which is significant due to household housing debt, is mainly contracted in New Zealand dollars.


The coalition government carries on

The 2017 parliamentary elections resulted in a majority-free Parliament and the formation of a coalition government between the Labour Party, the populist New Zealand First Party and the Green Party. Labour Prime Minister Jacinda Ardern continues to enjoy high popularity, which should put the Labour Party in poll position for the parliamentary elections scheduled for November 2020. The coalition does not appear to be under threat, although bad behaviour and resignations within the Labour Party and the government have tarnished its image. Nevertheless, disagreements between the coalition parties could weaken it, especially since the National Party, which held power between 2008 and 2017, remains a powerful opposition force in Parliament, and the parties will probably seek to differentiate themselves in the run-up to the elections.

Internationally, the country will benefit from being a (founding) member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). However, with its main trading partners being the United States and China (more than a third of New Zealand's trade), this will create uncertainty in the global context of the trade war, rising protectionism and a global economic slowdown.


Last update : February 2020


Primary payment methods in New Zealand consist of card (debit card and credit card) and electronic credit or debit (direct debits and credits, automated bill payments and electronic transfers). There has been a rapid increase in the use of contactless payments, mobile phone-based applications, and payments using the internet. Although cash remains important, its use is reducing significantly and cheque usage halved between 2013 and 2016. Wire transfers and SWIFT bank transfers are the most commonly used payment methods for domestic and international transactions. Most of New Zealand’s banks are connected to the SWIFT network.

Debt Collection

The debt collection process usually begins with serving a letter of demand, where the creditor notifies the debtor of their payment obligations (including any contractual interest due) with a time limit for making the payment.


Summary judgment proceedings

If the creditor does not receive payment after issuing a letter of demand, a next possible step is to issue summary judgment proceedings. This procedure is intended for situations where the debtor has no defence against the claim. An application can be made to the District Court or High Court, depending on the value of the claim. The District Court has jurisdiction to hear matters for claims up to NZD 350,000, and the High Court typically hears matters for claims above NZD 350,000. A statement of claim must be filed, along with a notice of proceedings, an application for summary judgment and a supporting affidavit by the creditor (or in the case of a company, an individual with personal knowledge of the facts who is authorised to submit an affidavit on behalf of the company), which sets out the facts of the claim. A summary judgment typically involves a hearing, which lasts around one day (if the debtor raises a defence), with evidence given by way of affidavit rather than requiring witnesses. If the application is successful, the Court may enter a judgment in favour of the creditor. If the application is undefended, judgment may be entered by default in favour of the creditor, without the need for a full hearing although an appearance in Court to call the matter will be required. If the defendant is able to show an arguable defence, the Court may decline summary judgment and direct the matter to be heard as an ordinary proceeding.


Ordinary proceedings

Ordinary proceedings are used where summary judgment is unavailable because the debtor has raised a genuine defence, or if summary judgment is not granted. Ordinary proceedings are initiated by filing a notice of proceeding and a statement of claim. Depending on the value of the claim (as outlined above), these proceedings can take place in the District Court or the High Court. Unlike summary judgment, an ordinary defended proceeding may involve additional processes, such as discovery, hearing of evidence and interlocutory applications, or serving of briefs of evidence, depending on the nature of the proceeding.



The High Court determines appeals from the District Court. The Court of Appeal has jurisdiction to hear appeals from the High Court. Appeals are generally restricted to questions of law only. Appeals to the highest appellate court in New Zealand, the Supreme Court, can only be heard with leave of that Court. Leave will be granted if the Supreme Court is satisfied that it is necessary in the interests of justice to hear the appeal.

Enforcement of a Legal Decision

If the Court enters judgment in favour of the creditor, there is no appeal, or all appeal avenues have been exhausted, the creditor can apply to the High Court, or District Court (depending on the value of the claim as outlined above), seeking enforcement action. This can include a deduction from the debtor’s wages or benefits (if the debtor is an individual), seizure of property, garnishee proceedings, or placing a charge on the debtor’s property.

Foreign judgments must first be recognised by the Court under the Reciprocal Enforcement of Judgments Act 1934, or common law.

Insolvency Proceedings


If the creditor does not receive payment after obtaining judgment against a debtor and that debtor is an individual, the creditor can issue a bankruptcy notice served on the debtor. Failure by the debtor to comply with a bankruptcy notice is considered by the law to be an act of bankruptcy.


Statutory demand

If the debtor does not make payment pursuant to the letter of demand and that debtor is a company, a further potential step is for the creditor to prepare and serve a statutory demand for the outstanding debt. This can be used as an alternative to summary judgment or ordinary proceedings. A statutory demand can only be issued if there is no substantial dispute over the debt. Once the statutory demand is served on the debtor, the debtor has 15 working days to pay the debt, or to enter into an arrangement for payment which is agreed by the creditor. If the debtor company does not make payment pursuant to the statutory demand, the creditor has a further 30 working days to commence liquidation proceedings against the debtor company, using non-compliance with the statutory demand as evidence of the debtor’s inability to pay its due debts. However, a debtor company can make an application to set aside a statutory demand within 10 working days of being served with it. The Court may set aside the statutory demand if there is a substantial dispute as to whether or not the debt is due, if the debtor company has a counterclaim, set-off or cross-demand, or if there are other adequate grounds to do so.



Liquidation involves the realisation and distribution of a debtor company’s assets when the company is insolvent, or does not expect to remain in business. A liquidator is appointed to the company, who takes over the management of the company, realises its assets, pays its creditors and distributes the remainder to its shareholders.


Creditors’ compromise

There are two potential forms of creditors compromise, either an informal agreement between debtor and creditor, or a formal creditors’ compromise under the Companies Act 1993. A formal creditors’ compromise is a binding agreement between a debtor company and its creditor(s) regarding the payment of its debts, with terms and conditions that are less exacting than the strict legal rights of creditors. A compromise may involve payments over time, deferred payments, or accepting a lesser sum in full and final settlement of the debt. Once a creditors’ compromise is approved by the required majority of creditors, or the Court, the compromise binds all creditors. An equivalent procedure exists for individuals under the Insolvency Act 2006.


Voluntary administration

The debtor company may go into voluntary administration to try and maximise the chances of an insolvent company continuing to operate, or if that is not possible, to allow for a better return for creditors than immediate liquidation. It enhances the existing creditors’ compromise procedure as an alternative to liquidation, by imposing a moratorium on creditors taking steps to enforce their debts.


Other alternative processes

The Disputes Tribunal conducts an informal and confidential process run by a referee to encourage both sides to reach an agreement, or make a binding decision if both sides cannot agree. At the first instance, this is typically a less costly option, as it avoids lawyers. However, the Disputes Tribunal can only hear claims for disputed debts of below NZD 15,000 or, if both parties agree to extend the financial limit, of up to NZD 20,000.

Arbitration or mediation (often less expensive than court proceedings) may also be used to resolve disputes and obtain more rapid out-of-court settlements.

Insolvency trend - New zealand
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