10th March 2017
Growth in New Zealand’s economy has been experiencing a slowdown in recent months, with Statistics New Zealand reporting a 0.4% rate of growth in the fourth quarter of 2016. That number is lower than previous predictions of 0.7% growth for the same period, and represents the country’s slowest rate of economic growth since the start of 2015.
At the same time, previous estimates for growth were also quietly downgraded, from 1.1% down to 0.8% for the third quarter of 2016. These numbers put New Zealand’s annual economic growth rate at 2.7%, only slightly ahead of the country’s annual population growth of 2%.
That population growth, spurred on in large part by foreigners coming to live in the country, has complex effects for New Zealand as a whole. In some respects, new residents are most welcome; for example, a recent governmental study concluded that just 725 foreign students in the Taranaki area contributed a total of $20 million to the regional economy, once living costs and tuition were factored in.
A surprisingly strong influx of tourists also boosted the country’s total revenue significantly last year, but externalities such as environmental degradation have been a very real consequence of the increased numbers of visitors. A strain on infrastructure has also been noticeable throughout the country as a result of its international popularity.
In most countries, environmental costs are simply a byproduct of economic growth, and recently the Organisation for Economic Co-operation and Development released a report urging New Zealand to accelerate its transition to a greener economy.
The international business world, however, is moving forward to new opportunities in all areas. Apple has just opened a new office in Wellington, with an aim toward developing ‘augmented reality’ technology for worldwide use in a new generation of wearable hardware. The company has already hired specialists in AR and special effects, in an effort to entertain and inform consumers by seamlessly overlaying computer-generated effects onto real-world objects.
Exciting as this technology may be, and beneficial to the employment market, New Zealand may not experience the full potential benefit of Apple’s investment. Apple has recently been singled out within the country for paying zero tax on profits of $4.2 billion within New Zealand over the last 10 years – a sobering check on local enthusiasm for a prestigious company building a new office in the capital city. The hundreds of millions in cleverly-but-legally-avoided tax obligations could have put New Zealand on better economic footing, particularly in regard to the infrastructure shortfall it has experienced of late.
Fortunately, New Zealand has other victories to celebrate in the international business ecosystem. Among them are the country’s start-up companies, which have put up a strong showing compared to their counterparts overseas. According to a recent business survey, New Zealand’s start-ups have the highest percentage of overseas customers out of all 50 nations that participated in the research. This ability to build a successful international business model is no doubt a consequence of the country’s small domestic market, but it bodes well for future growth.
That ability to ‘go global’, combined with New Zealand start-ups’ high overall ranking in corporate interest surveys, has helped attract international investors that can provide funding opportunities for increased expansion. Rather than waiting for foreign visitors and corporations to light the way toward New Zealand’s future, all indications show that home-grown talent is also highly willing and very much up to the task.
(primary source: http://www.stuff.co.nz/business/90495020/nz-economy-records-weakest-growth-since-start-of-2015)