13th September, 2010
New Zealand‘s economic recovery through the global financial crisis is stronger than most other developed countries and there are a few reasons for this.
1. Proximity to Australia
Australia is our closest neighbour and largest trading partner. The economy in Australia is strong, having just creating over 50,000 new jobs last month. The solid ties to the burgeoning Chinese economy and the appetite they have for Australian raw materials has also helped to stabilise things there. In New Zealand we have our own benefits – a stable economy and political climate as well as real assets in rich farmland, fisheries and mineral resources.
2. Located in Asia-Pacific Region
New Zealand also has its own ties to what will soon become the biggest economy in the world, China. China is currently New Zealand’s second largest trading partner. China will lead the way for the whole of the Asia Pacific region’s recovery.
3. Australian Owned Banks
Although not very patriotic; the fact that the top four banks in this country are Australian owned should have been a source of relief for our economy back in the challenging days of 2009. The core of any economy is its banking system and Australian tax payers and savers proved they would underwrite our banks back in October 2008 – when they voted for a much needed cash injection of over $25 billion in fresh cash.
4. Lessons Learnt
New Zealanders have learned their lesson from the excesses of the last 20 years and are saving and investing at a much improved rate. People in this country are prioritising debt repayment and savings – and a new report out from the Treasury shows the ratio of household debt to disposable income is falling.
5. Reforms to the New Zealand Tax System
The New Zealand Government is looking to structure the economic focus away from consumer driven products to export and production, which should build a solid foundation moving forward. Changes to GST, property tax breaks and a reduction in income tax rates should all help with this.
6. Reduction in Foreign Debt
The global financial crisis has forced banks here in New Zealand to look at sourcing funding locally as opposed to the at times unstable wholesale money markets. By reducing foreign debt this is going to help keep our economy independent and stable.
7. New Zealand Entrepreneurs
New Zealanders have a fine reputation as talented technology entrepreneurs. These people are staying in New Zealand and reinvesting their wealth in a useful capacity such as the multi-billion dollar investment required for the Pacific Fibre Cable.
8. Resourceful, Creative and Resilient
The recent earthquake along with New Zealand’s reaction to the global financial crisis has been to pull together and to get on with rebuilding with a minimum of social strife and disruption.
9. Global Identity
New Zealand is seen as non-threatening to other countries. We are also seen as innovative, open and friendly. Good trading relationships can be forged on the back of positive feedback such as this.
Ref: NZ Herald – 12.09.2010