New Zealand Country Risk Report

Published 25 March 2015 | Quarterly

  • 50 pages
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$1,195.00
New Zealand Country Risk Report

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
South Korea FTA A Boon To Business
8
The free trade agreement between New Zealand and South Korea is set to be ratified by Q115, subject to parliamentary approval, and
The free trade agreement between New Zealand and South Korea is set to be ratified by Q115, subject to parliamentary approval, and
will provide significant benefits to New Zealand's meat and dairy exports
Additionally, recued import tariffs on consumer gods should
support real incomes, helping to offset the impact of weakening terms of trade and a depreciating currency
table: POLITICAL OVERVIEW
8
Long-Term Political Outlook
9
Stability To Prevail, But Not Without Challenges
9
New Zealand is likely to remain one of the most stable states in the world over the coming decade
The government's main challenges
are to rein in the budget deficit, improve the business environment to attract greater foreign investment and raise opportunities for the
are to rein in the budget deficit, improve the business environment to attract greater foreign investment and raise opportunities for the
indigenous Maori population
A key
wild card is whether New Zealand deepens political ties with its neighbour, possibly in the form of a confederation
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Evidence Of A Growth Slowdown
14
We are beginning to see signs of a slight slowdown in the New Zealand economy
The crucial agricultural sector is cooling, while the
services and construction sectors are currently the only drivers of growth, leaving the economy susceptible to weakness in the New
services and construction sectors are currently the only drivers of growth, leaving the economy susceptible to weakness in the New
Zealand dollar and the property market
table: Economic Activity
14
Monetary Policy
15
Long Pause Call Gaining Credence
15
Our contrarian view of a no further interest rate hikes by the Reserve Bank of New Zealand until 2016 is gaining credence as consensus
Our contrarian view of a no further interest rate hikes by the Reserve Bank of New Zealand until 2016 is gaining credence as consensus
expectations continue to gradually decline while interest rate markets price out aggressive hikes
As real GDP growth weakens, and
macro-prudential housing measures remain in place, inflationary pressures will remain benign
table: Monetary Policy
16
Fiscal Policy
17
Surplus Delayed But Outlook Still Positive
17
The New Zealand government is set to run a small fiscal deficit in Fiscal Year 2014/15, but the overall trends of narrower deficits and
The New Zealand government is set to run a small fiscal deficit in Fiscal Year 2014/15, but the overall trends of narrower deficits and
falling spending relative to GDP remain in place
2% of GDP in FY2014/15, before flipping to a
surplus of 0
table: Fiscal Policy
17
Currency Forecast
19
NZD: Further Weakness Ahead
19
We forecast the NZD to average USD0
7700/NZD is a key
technical support level, and a break below this would suggest a move down to USD0
Fundamentally, the
Reserve Bank of New Zealand continues to talk down the currency, and widespread expectations of interest rate hikes are gradually
Reserve Bank of New Zealand continues to talk down the currency, and widespread expectations of interest rate hikes are gradually
being unwound, which will act as headwinds to the currency
Table: Current Account
20
table: BMI CURENCY FORECAST
20
Business Monitor International Ltd www
com 3
Contents
Contents
Chapter 3: 10-Year Forecast
21
The New Zealand Economy To 2023
21
Deleveraging Will Weigh On Growth
21
The main factors that contributed to New Zealand's solid real GDP growth outturn over the past decade will not be in play to the same
The main factors that contributed to New Zealand's solid real GDP growth outturn over the past decade will not be in play to the same
degree over the next 10 years
Population growth will slow, terms of trade support will be hard to come by, and we expect New Zealand
households will eventually experience protracted deleveraging cycle
5% over the
2014-2023 period, below the 3
table: Long-Term Macroeconomic Forecasts
21
Chapter 4: Operational Risk
23
SWOT Analysis
23
Operational Risk Index
23
Operational Risk
24
Table: Developed States - Labour Market Risk
24
Table: Developed States - Logistics Risk
27
Table: Developed States - Crime & Security Risks
29
Table: Developed States - Trade & Investment Risk
32
Chapter 5: Key Sectors
35
Infrastructure
35
table: Construction & Infrastructure Industry Data
36
Table: Construction & Infrastructure Industry Data
37
Oil & Gas
39
table: Oil Production
40
table: Oil Production
40
table: Gas Production
41
table: Gas Production
41
Other Key Sectors
43
table: Pharma Sector Key Indicators
43
table: Telecoms Sector Key Indicators
43
table: Food & Drink Sector Key Indicators
44
Chapter 6: BMI Global Assumptions
45
Global Outlook
45
Warning Signs Growing
45
Table: Global Assumptions
45
Table: Developed States, Real GDP GrowtH, %
46
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
46
Table: Emerging Markets, Real GDP Growth, %
47

The New Zealand Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in New Zealand. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of New Zealand's economic, political and financial prospects through end-2019, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of New Zealand's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise New Zealand's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in New Zealand, including currency volatility, the commodity price boom and protectionist policies.

The New Zealand Country Risk Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the New Zealand' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for New Zealand through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The New Zealand Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for New Zealand and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on New Zealand, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in New Zealand over the next 5-years?

BMI's New Zealand country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the New Zealand Market - Political Strengths, Weaknesses, Opportunities and Threats facing New Zealand.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for New Zealand's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of New Zealand’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark New Zealand's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in New Zealand?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks New Zealand against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

Key Sector Outlook*

Which industry sectors in New Zealand will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in New Zealand's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express