Despite the dire economic consequences and gloomy predictions resulting from the immediate reactions to the COVID-19-induced economic recession, there is still good reason for New Zealanders to be optimistic about our ability to recover more quickly and strongly than most other countries.
1) We are a small and agile nation
New Zealand is a small country with a relatively small economy. Our nominal GDP is approximately $300 billion and our total Crown assets are around $370 billion.
These figures show that New Zealand is, in comparative economic terms, smaller than some of the world’s largest businesses.
Amazon had 2019 revenues of NZ$431 billion and total assets of NZ$346 billion. Apple is another example, with 2019 revenues of NZ$399 billion and total assets of NZ$521 billion.
However, as we know, big is not always best. The benefit of being a small country is that it enables our economy to be nimble, meaning it can change and adapt quickly.
The traditional Kiwi ‘can do’ attitude needs to remain at the forefront, let’s talk about what we can do, not what we can’t do.
New Zealand’s relative ease of doing business and closeness of relationships should help to get things done.
All of this is far more difficult in larger economies, such as the US.
2) Our natural borders are our friend
Another natural advantage stems from our geographic isolation. As an island nation in the South Pacific, we have natural borders.
Historically, this has helped protect our agriculture from pests and disease; and now it also acts as a natural barrier to stem the spread of pandemics like COVID-19.
Our ability to quickly impose stringent border quarantine measures means that we have created a safe domestic environment, one that allows people to largely go about their lives and work on a day-to-day basis with freedoms that may still be some time away in other countries.
3) We have globally-competitive primary industries
Major sectors of our economy continue to be well positioned and have not suffered greatly through the COVID-19 crisis.
Our largest industry being primary agriculture, accounting for over 20% of GDP, continues to perform strongly across most segments.
We have a natural competitive advantage as a low cost, high quality producer of proteins, which remain in strong demand globally.
Fortunately, we continue to have access to the world’s markets, especially large, growing markets like China and other Asian countries.
Our exporters have also shown agility, in terms of switching between markets as global trends change.
New Zealand’s trade deals have been helpful. The New Zealand/China Free Trade Agreement has had an impressive impact on our two-way trade with China over the last decade.
4) We can explore new infrastructure opportunities
We have the ability to stimulate our economic recovery using the much needed catch-up in infrastructure spending, although it is critical to ensure that we invest in the right projects that will deliver the best long term returns, from an economic perspective as well as broader societal and environmental returns.
To do this, we may need to revisit previous assumptions about what sort of infrastructure is needed, given the enormity of the changes likely to eventuate in a post-COVID-19 world.
5) Our digital investment can really pay off
We have all learned over recent weeks some new realities about the digital world that we live in.
New Zealand has reaped the benefit from its investment in ultra-fast broadband (UFB).
More than 1.6 million households and businesses now have access to UFB and the national UFB rollout is over 85% complete, extending to more than 110 towns and cities, and now reaching more rural areas as well.
Our workforce has the ability to upskill and take advantage of this digital world, as evident from our thriving technology businesses.
Technology has also reduced the tyranny of distance that New Zealand historically suffered from, given our distance from most of our major trading partners.
6) We possess an abundance of renewable energy
With respect to climate change, which was viewed as one of the most pressing issues in New Zealand at the start of 2020, this country has some clear advantages compared to others.
We are fortunate to have a high concentration of renewable energy sources in our electricity generation mix and an abundance of land for tree planting and other sequestration activities.
We have a great opportunity to leverage our heavily renewable electricity mix to address carbon emissions across other sectors, such as the electrification of vehicles, which represent nearly 20% of New Zealand’s gross greenhouse gas emissions.
In addition, New Zealand has an established emissions pricing mechanism through the Emissions Trading Scheme (ETS).
7) We have strong institutions and political stability
Finally, New Zealand continues to have strong public institutions and political stability, both of which are essential enablers to business investment.
Transparency International’s Corruption Perceptions Index ranked New Zealand equal first (alongside Finland) in its 2019 survey of 180 counties, indicating a very high level of confidence around the absence of corruption within our public sector.
Our two major political parties are both centrist parties, and over time have demonstrated fairly similar approaches on many issues.
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IMPORTANT: This article is of general nature only and readers should obtain advice specific to their circumstances from professional advisers.