Overall Score: 82.1 World Rank: 3
7 Major Sources of Economic Progress
New Zealand is heavily dependent on international trade , particularly in agricultural products. Wool was New Zealand's major agricultural export during the late 19th century. Even as late as the 1960's it made up over a third of all export revenues, but since then its price has steadily dropped relative to other commodities and wool is no longer profitable for many farmers.
An Efficient Capital Market
New Zealand has a modern, prosperous and developed market economy with an estimated gross domestic product at purchasing power parity per capita roughly NZ$47,784. New Zealand was ranked sixth in the 2013 Human Development Index, fourth in the The Heritage foundations 2012 Index of Economic Freedom, and the 13th in Insead's 2012 Global Innovation Index.
Since 1984 success of governments engaged in major macroeconomic restructuring rapidly transforming New Zealand from a highly protectionist economy to a liberalized free trade economy. Unemployment peaked in 1992 but eventually fell to a record low of 3.4% in 2007. However, the global financial crisis that followed had a major impact on New Zealand with the GDP shrinking for five quarters, the longest recession in over 30 years.
Low Tax Rates
New Zealand went through a major tax reform in the 1980's. The top marginal rate of income tax was reduced from 66% to 33% and corporate income tax rate fem 48% to 33%. Goods and services tax was introduced initially at a rate of 10%. $0-$14,000= 10.5%. $14,001-$48,000= 17.5%. $48,001-$70,000= 30%. Over %70,000=33%. No-notification rate= 45%.
The economy of New Zealand is a market economy which is greatly dependent on international trade mainly with Australia, the USA, China and Japan. It is strongly dependent on tourism and agricultural exports, and has only small manufacturing in high tech components. The world bank has praised New Zealand as being the most business friendly country in the world.
The New Zealand Economy is in good shape
The economy survived the recession and came out stronger with the addition of the prime minister.