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Economy
Economy
New Zealand has a modern, prosperous, developed economy with an estimated nominal Gross domestic product (GDP) of US$128.1 billion (2008).
The country has a relatively high standard of living with an estimated GDP per capita of US$30,234 in 2008, comparable to Southern Europe, e.g.
Spain US$33,385, but lower than the United States at US$46,820.
Since 2000 New Zealand has made substantial gains in median household income.
New Zealand, along with Australia, largely escaped the early 2000s recession that affected most other Western countries.
New Zealanders have a high level of life satisfaction as measured by international surveys; this is despite lower GDP per-head levels than many other OECD countries.
The country was ranked 20th on the 2006 Human Development Index and 15th in The Economist's 2005 worldwide quality-of-life index.
The country was ranked 1st in life satisfaction and 5th in overall prosperity in the 2007 Legatum Institute prosperity index.
In addition, the 2007 Mercer Quality of Living Survey ranked Auckland 5th place and Wellington 12th place in the world on its list.
Taxation in New Zealand is lighter than in other OECD countries.
New Zealand is one of the most free market capitalist economies according to economic freedom indices.
The service sector is the largest sector in the economy (68.8% of GDP), followed by manufacturing and construction (26.9% of GDP) and the farming/raw materials extraction (4.3% of GDP).
New Zealand is a country heavily dependent on free trade, particularly in agricultural products.
Exports account for around 24% of its output, which is a relatively high figure (it is around 50% for many smaller European countries).[ii] This makes New Zealand particularly vulnerable to international commodity prices and global economic slowdowns.
Its principal export industries are agriculture, horticulture, fishing and forestry.
These make up about half of the country's exports.
Its major export partners are Australia 20.5%, US 13.1%, Japan 10.3%, China 5.4%, UK 4.9% (2006).
Tourism plays a significant role in New Zealand's economy.
Tourism contributes $12.8 billion (or 8.9%) to New Zealand’s total GDP and supports nearly 200,000 full-time equivalent jobs (9.9% of the total workforce in New Zealand).
Tourists to New Zealand are expected to increase at a rate of 4% annually up to 2013.
The New Zealand dollar is the currency of New Zealand.
It also circulates in the Cook Islands (see also Cook Islands dollar), Niue, Tokelau, and the Pitcairn Islands.
It is sometimes informally known as the "Kiwi dollar".
Recent history
Historically New Zealand enjoyed a high standard of living which relied on its strong relationship with the United Kingdom, and the resulting stable market for its commodity exports.
New Zealand's economy was also built upon on a narrow range of primary products, such as wool, meat and dairy products.
High demand for these products - such as the New Zealand wool boom of 1951 created sustained periods of economic prosperity.
However, in 1973 the United Kingdom joined the European Community which effectively ended this particularly close economic relationship between the two countries.
During the 1970s other factors such as the oil crises undermined the viability of the New Zealand economy; which for periods before 1973 had achieved levels of living standards exceeding both Australia and Western Europe.
These events led to a protracted and very severe economic crisis, during which living standards in New Zealand fell behind those of Australia and Western Europe, and by 1982 New Zealand was the lowest in per-capita income of all the developed nations surveyed by the World Bank.
Since 1984, successive governments have engaged in major macroeconomic restructuring, transforming New Zealand from a highly protectionist and regulated economy to a liberalised free-trade economy.
These changes are commonly known as Rogernomics and Ruthanasia after Finance Ministers Roger Douglas and Ruth Richardson.
A recession began after the 1987 share market crash and caused unemployment to reach 10% in the early 1990s.
Subsequently the economy recovered and New Zealand’s unemployment rate reached a record low of 3.4% in the December 2007 quarter, ranking fifth from twenty-seven OECD nations with comparable data.
The current government's economic objectives are centred on pursuing free-trade agreements and building a "knowledge economy".
On 7 April 2008, New Zealand and China signed the New Zealand China Free Trade Agreement, the first such agreement China has signed with a developed country.
Ongoing economic challenges for New Zealand include a current account deficit of 7.9% of GDP, slow development of non-commodity exports and tepid growth of labour productivity.
New Zealand has experienced a series of "brain drains" since the 1970s, as well educated youth leaving permanently for Australia, Britain or the United States.
"Kiwi lifestyle" and family/whanau factors motivates some of the expatriates to return, while career, culture, and economic factors tend to be predominantly 'push' components, keeping these people overseas.
In recent years, however, a brain gain brought in educated professionals from poor countries, as well as Europe, as permanent settlers.
Energy production
Seventy per cent of electricity in New Zealand is generated with renewable energy, primarily hydropower and geothermal power.
Agriculture
Agriculture has been and continues to be the main export industry in New Zealand.
In the year to June 2007, dairy products accounted for 21% ($7.5 billion) of total merchandise exports, and the largest company of the country, Fonterra, a dairy cooperative, controls almost one-third of the international dairy trade.
Other agricultural items were meat 13.2%, wood 6.3%, fruit 3.5% and fishing 3.3%.
New Zealand also has a thriving wine industry.
Livestock are rarely housed, but are sometimes fed small quantities of supplements such as hay and silage, particularly in winter.
Grass growth is seasonal, largely dependent on location and climatic fluctuations but normally occurs for between 8-12 months of the year.
Stock are grazed in paddocks, often with moveable electric fencing around the farm.
Lambing and calving are carefully managed to take full advantage of spring grass growth.
In 1984 the New Zealand Labour Party ended all farm subsidies.
Source: CIA Factbook, Wikipedia
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