New Zealand's Economy Conditions

New Zealand has a relatively small economy with GDP (Gross Domestic Product) of about $103 billion (2006) and its population is also small in size. In the past, its economy was highly regulated. However, this government policy has been changed to a more open and market-oriented one. As a result New Zealand's economy is characterized by stability and great modernization.

The movement toward knowledge-based economy has been done through the Fiscal Responsibility Act, which was implemented in 1994. Before it, the economy was agricultural farming oriented. However, after the passing of the act, the country bases its economy mainly on highly skilled and highly employed work force, which tends to produce value added production. Public accountability of the government regarding its fiscal policy is established in the act. Additionally, the macroeconomic principles are included in the act, which the government is required to abide.

The manufacturing and service industries of the country are very well-developed. However, a big portion of the exports of New Zealand is contributed by the agricultural industry. The export of goods and services is the primary contributor to the nation's GDP, which makes the country strongly trade-oriented.

The sensitivity of New Zealand to global economic performance is stressed not only by its relatively small economy, but also by its close trade relationships with its trade partners, the primary of which are coming from Australia and Japan.

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