Competitive edge breeds optimism
CONFIDENCE in New Zealand's economic recovery is high after a decade of despondency.
The optimism is based on real and sustained growth due mainly to a sharpened competitive edge and diversification of exports.
Export growth is strong despite weak international economic conditions, and export prices are rising.
Employment has begun improving, the inflation rate is one per cent and import growth is picking up as household spending and business investment recovers.
According to the chief economist at the National Bank of New Zealand, Girol Karacaoglu, the expectation of low inflation is underpinned by fundamental institutional changes that have been implemented over the last three years.
These include the legislated responsibility of New Zealand's Central Bank to achieve and maintain stability in the general level of prices.
They also include the effect of the Employment Contracts Act 1991, which has almost completely deregulated the labour market, in ensuring that wage movements are closely related to changes in productivity.
Thirdly, there is the economic liberalisation which has resulted in a more competitive environment in which producers and retailers are operating.
He said the sustainable economic growth was driven by the sharp improvement in the international competitiveness of New Zealand industry.
Business investment is picking up and significant new investment is expected over the next three years in the basic metals, forestry, chemicals, wood products, and transport sectors also contributes to expectations for sustained growth.
Last year, New Zealand Finance Minister Ms Ruth Richardson went on a two-week Asian tour. She said foreign investment, particularly from Asia, was crucial to the recovery of New Zealand's battered economy.
An Asia 2000 campaign aimed to focus on closer relations between the South Pacific country and East Asia, increasing the flow of trade, people and ideas with more tourism and closer cultural links.
The economic drive has produced good results. Exports to Asia are growing particularly strongly with sales to Hongkong up by over 45 per cent and standing at around NZ$400 million (HK$1.56 billion).
Trade with China is also on the increase. Sales are up, and two-way imports make for a trade balance that is good for both partners.
Tourism is New Zealand's biggest business, and it is booming.
Visitors, the majority from Australia, the United States, Japan, Britain and Germany, topped the million mark for the first time in the year ending April last year.
The industry generated the largest single amount of overseas income of about NZ$6 billion a year.
The long-term aim of the tourism board is to attract three million visitors by the year 2000. Amazingly, this is about the size of New Zealand's population.
A series of investment seminars across the world have began to promote opportunities in New Zealand, and Auckland has won a bid to host the 1994 world conference of the Society of Incentive Travel Executives.