Better Understanding of New Zealand’s economy and NZD!


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By: Ahura Chalki

Country overview

New Zealand is a sovereign island country in the southwestern Pacific Ocean. The country geographically comprises two main landmasses—the North Island (Te Ika-a-Māui), and the South Island (Te Waipounamu)—and around 600 smaller islands. It has a total land area of 268,000 square kilometers. It was one of the last lands to be settled by humans. New Zealand’s capital city is Wellington, while its most populous city is Auckland. (Wikipedia). New Zealand is also known as “Aotearoa”, which means “Land of the Long White Cloud” in Maori, one of the major languages in the country.

New Zealand has an advanced market economy, ranked 16th in the 2018 Human Development Index and third in the 2018 Index of Economic Freedom. It is a high-income economy with a nominal gross domestic product (GDP) per capita of US$36,254. (Wikipedia)

The currency

Till 1967, it was called New Zealand Pound, but different from the sterling pound, since 1933. From the 10th of July 1967 officially it changed. Since 1967, when it divided into 100 parts, the name has been changed to Dollar and the small parts have been called Cents. The currency affectionately referred to as the Kiwi, trades under the symbol NZD or NZ$ (Investopedia). On the 10th of July 1967, the New Zealand dollar was introduced to replace the New Zealand pound, one pound equaling two dollars. Around 27 million in banknotes were printed and 165 million in coins (Global Exchange). Today we have banknotes of 5, 10, 20, 50 and 100 New Zealand dollars. New Zealand dollar is the official currency of New Zealand, Cook Islands, Niue, Tokelau, and the Pitcairn Islands.

The most important Economic Indexes of the country

GDP: If we order the countries according to their GDP per capita, New Zealand is in the 18th position of the 50 countries whose quarterly GDP we publish ( The latest update of data shows +0.5% quarter growth while annual was raised by 2.4% and the size of the economy at current prices is $300 billion (State data of New Zealand). As you can see in the below chart (source: how GDP and GDP per capita of the country have been growing over the past 80 years. New Zealand GDP per capita for 2018 was $41,966, a 0.7% decline from 2017.

Interest rate: The Reserve Bank of New Zealand left its official cash rate/OCR unchanged at a record low of 1 percent on September 25th, 2019, as widely expected, and following a 25 bps cut in the previous meeting. Interest Rate in New Zealand averaged 7.26 percent from 1985 until 2019, reaching an all-time high of 67.32 percent in March of 1985 and a record low of 1 percent in August of 2019 (RBNZ). While NZD usually always had a higher interest rate than Euro and USD, it was helping the currency to have a higher rate as well against the major currencies in the world, as well as USD and Euro, the first and second most popular currencies, however, since 2010, RBNZ started to ease the interest rate with aim of its export industry.  We have to note that raises the interest rates it is positive, or bullish, for the NZD and vice-versa.
It should also be noted that the latest statements of RBNZ Governor have been in favor of a no change in the present monetary policy after announcing a surprise 0.50% rate cut in July 2019. At the moment, New Zealand continues pushing market players to expect one more rate cut from the central bank in 2019.

Inflation Rate: The annual inflation rate in New Zealand climbed to 1.7 percent in the second quarter of 2019 from 1.5 percent in the previous period, matching market expectations. Inflation Rate in New Zealand averaged 4.65 percent from 1918 until 2019, reaching an all-time high of 44 percent in the third quarter of 1918 and a record low of -15.30 percent in the first quarter of 1923 (RBNZ)

Employment: The latest update of the State government of New Zealand in March 2019, shows a 4.2% total unemployment rate, while it is 3.9% for men and 4.5% for women.

Industrial and Manufacturing production: Industrial Production in New Zealand averaged 1.49 percent from 1995 until 2019, reaching an all-time high of 17.60 percent in the second quarter of 1995 and a record low of -10.50 percent in the second quarter of 2009. Largest industries in-country respectively are ( 1- Agriculture, 2- Horticulture, 3- Forestry, 4- Mining

The “” ranked New Zealand’s Top 10 Exports during 2018 respectively:

  • Dairy, eggs, honey: US$10.2 billion (26.5% of total exports).
  • Meat: $5.2 billion (13.5%).
  • Wood: $3.6 billion (9.4%).
  • Fruits, nuts: $2.2 billion (5.8%).
  • Beverages, spirits, vinegar: $1.4 billion (3.5%).
  • Cereal/milk preparations: $1.3 billion (3.3%).
  • Fish: $1.1 billion (2.9%).
  • Machinery including computers: $1 billion (2.7%).
  • Aluminum: $850.9 million (2.2%).
  • Miscellaneous food preparations: $842.9 million (2.2%)

These products mostly exporting to China (24.9% of New Zealand’s total exports), after China, we can mention Australia (14.8%), United States (9.6%) and Japan (6.3%). South Korea, United Kingdom, Singapore, Taiwan, and Hong Kong also have between 2-3% parts.

               On the other hand, New Zealand mostly imported Cars (10%), Crude Petroleum (5.4%), Refined Petroleum (3.9%), Delivery trucks (3.7%), Broadcasting equipment (2.8%) and Computers by 2.2% (

               Country’s most important trading partners are China, Australia European Union is New Zealand’s third-largest market for trading goods and services (   

 What mostly moves NZD?

(I) The Reserve Bank of New Zealand (RBNZ) is in charge of the monetary and fiscal policy of the nation. The RBNZ is tasked with maintaining price stability, setting interest rates, and monitoring output and exchange rates. Currently, the interest rate is 1.00%.

(II) Commodities! Since New Zealand’s economy is mostly dependent on its exports of commodities and agricultural products, so mostly NZD rate depends on commodities price, as more export means better GDP, which is supporting the Kiwi.

(III) AUD and CHY, Since China and Australia, are the largest trade partners, any changes in these currencies, as well as their economic data, have a direct impact on NZD.

Risk Warning: Trading-Leveraged Products such as Forex and Derivatives may not be suitable for all investors as they carry a high degree of risk to your capital. Please ensure that you fully understand the risks involved, taking into account your investment objectives and level of experience, before trading, and if necessary, seek independent advice.


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