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New Zealand

New Zealand

Population 4,7 million
GDP 38 278 US$
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Business Climate
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  2015 2016 2017(f) 2018(f)
GDP growth (%) 3.2 3.6 2.8 2.9
Inflation (yearly average, %) 0.3 0.6 2.2 2.0
Budget balance (% GDP) * 0.6 0.9 0.1 -0.1
Current account balance (% GDP) -3.4 -2.8 -3.6 -3.8
Public debt (% GDP) 29.5 29.2 26.4 23.7

* 2017/2018 fiscal year (1 July to 30 June) (f): forecast


  • Proximity to Asia and Australia
  • Tourist appeal and large agricultural sector
  • Small public debt; balanced public accounts
  • Dynamic demographics thanks to immigration
  • Quality of life


  • Economy dependent on foreign investment
  • High household and corporate debt levels (particularly in the agriculture sector)
  • Dependence on demand from China
  • Shortages of skilled labour
  • Housing shortage
  • Weakness in R&D


Dynamic growth despite continuing dangers of the housing market

Sustained by domestic demand, activity, is expected to remain firm in 2018. Household consumption will likely be boosted by higher wages, falling unemployment (4.6% in October 2017), and continuing low interest rates (1.75% in November 2017). In addition, lower income households will receive increased family allowances, a 5% increase in the minimum wage, and a reduction in income tax. Public spending is expected to help sustain economic activity through investments in infrastructure and social welfare.

Exports are set to be revitalised, thanks to the improving terms of trade linked with rising milk prices (one-quarter of exports), and by firm external demand. The arboriculture (apple and kiwi) and wood sectors are also likely to perform better. However, the level of indebtedness among farmers is high due to the need to offset losses caused by persistent low prices, which means that they are vulnerable to price movements and any major climate shocks (e.g. droughts, earthquakes). The tourism sector is also expected to perform strongly, although its contribution to growth will likely be smaller.

The monetary policy imposed by the central bank is likely to be less accommodating in 2018, due to the goal of maintaining inflation at its target level (1-3%). The slowdown in the property market and in credit will help limit the risks associated with higher financing costs. The housing market is expected to contract because of the reduction in demand linked with the excess cost of housing, the high levels of household indebtedness (170% of disposable income) and the reduction in immigration. The construction sector is likely to feel the effects of this slowdown, and also to suffer from a labour shortage.


Strong budget situation and current account deficit under control

The budget is expected to be very close to balance. Spending on social and health care is set to continue to be the main expenditure item, especially as these are due to rise under the “Family Income” programme. This covers income tax exemptions for those on very low incomes, as well as increases in family allowances. Substantial infrastructure investments are also expected, notably with the reconstruction of the roads and railways damaged in the November 2016 major earthquake. The increase in spending should be limited, however, and offset by a slight increase in revenues. Public debt, already low, will likely fall, but will continue to be held by non-residents. In addition, the country will have to find a way of dealing with an increasing deficit in its social security system (ageing population).

The current account is expected to worsen slightly in 2018. This is subject to a structural deficit due to the income balance deficit (3% of GDP in 2016) linked with the repayment of external debt (90% of GDP), the low domestic savings rate, and the outward transfer of profits by foreign firms. Moreover, the balance of trade is set to remain in deficit (1% of GDP), as the growth of exports will still not cover that of imports. The balance of services, however, should be in surplus (1.8% of GDP), mainly thanks to tourism.

The New Zealand banking sector is essentially well capitalised, although the low household savings rate means that banks have to borrow on the financial markets and are thus exposed to their volatility. The level of concentration in the sector –just four key banks (mainly subsidiaries of Australian banks) – and high household debt levels are also potential areas of vulnerability.


A new and fragile coalition government

In the September 2017 parliamentary elections, the conservative National Party, in office since 2008, lead the vote at 45% (56 seats out of 120), but failed to obtain an absolute majority and thus form a government. Following five weeks of negotiations, the centre-left Labour Party (second place with 46 seats) formed a coalition government with the support of the populist New Zealand First party (9 seats) and the Green Party (8 seats). Led by the new Prime Minister, the Labour Party’s Jacinda Ardern, the government’s policies are expected to be less welcoming in terms of immigration and foreign investors, and to be more expansionist regarding the budget. Nevertheless, disagreements between the coalition member parties could derail the coalition, especially as the National Party will be a powerful opposition force in Parliament.

In economic terms, the reduction in business failures looks set to continue, and the business climate is strongly positive, with the country situated at the top (out of 190 countries) of the World Bank “Doing Business 2018” rankings.


Last update : January 2018




The primary payment methods are card (debit card and credit card) and electronic credit or debit (direct debits and credits, automated bill payments and electronic transfers). There is a rapid growth in the use of contactless payments, mobile phone-based applications and on-line payments. Although cash remains important, its use is rapidly reducing and cheque usage halved between 2013 and 2016.

Wire transfers and SWIFT bank transfers are the most commonly used payment methods for domestic and international transactions. Most of the country’s banks are connected to the SWIFT network.


Debt collection

General process

The debt collection process begins with the serving of a letter of demand, in which the creditor notifies the debtor of his payment obligations - including any contractual interest due – with a time limit to make the payment.


Summary judgment proceedings

If the creditor does not receive any payment following the letter of demand, summary judgment proceedings can be issued. This procedure is intended for situations where the debtor has no real defence against the claim. An application can be made to the District Court or High Court, depending on the value of the claim. A statement of claim must be filed, along with a notice of proceedings, an application for summary judgment and a supporting affidavit by the creditor (or in the case of an entity, an individual with personal knowledge of the facts), which sets out the facts of the claim. A summary judgment typically involves a hearing, which lasts around one day (if the matter is defended), with evidence given by way of affidavit rather than requiring witnesses. If the application is successful, the Court may enter a judgment in favour of the creditor. If the application is undefended, judgment may be entered by default in favour of the creditor, without the need for a hearing. If the defendant is able to show an arguable defence, the Court may decline summary judgment and direct the matter to be heard as an ordinary proceeding.


Ordinary proceedings

Ordinary proceedings are initiated by filing a notice of proceeding and a statement of claim. Depending on the value of the claim, these proceedings can take place in the District Court (up to NZD 350,000) or the High Court (claims of a higher amount). Unlike summary judgment, an ordinary defended proceeding may involve additional processes, such as discovery, hearing of evidence and interlocutory applications.



The High Court determines appeals from the District Court. The Court of Appeal has jurisdiction to hear appeals from the High Court, but this is generally restricted to appeals on questions of law. Appeals to the highest appellate court in New Zealand, the Supreme Court, can only be heard with leave of the Court. Leave will be granted if the Court is satisfied that it is necessary in the interests of justice to hear the appeal.


Enforcement of a legal decision

If the Court enters judgment in favour of the creditor, there is no appeal, or all appeal avenues have been exhausted, the creditor can apply to the High Court, or District Court (depending on the value of the claim), to seek enforcement action, which can include a deduction from the debtor’s wages or benefits (if the debtor is an individual), seizure of property, garnishee proceedings, or placing a charge on the debtor’s property. Foreign judgments must first be recognised by the Court under the Reciprocal Enforcement of Judgments Act 1934, or common law.


Insolvency proceedings


If the creditor does not receive payment after obtaining judgment and the debtor is an individual, the creditor can issue a bankruptcy notice. Failure to comply with a bankruptcy notice is an act of bankruptcy.


Statutory demand

If the debtor does not make payment pursuant to the letter of demand and the debtor is a company, a further potential step is for the creditor to prepare and serve a statutory demand for the amounts outstanding. A statutory demand can only be issued if there is no substantial dispute over the debt. Once served, the debtor has 15 working days to pay the debt, or to enter into an arrangement for payment which is agreed by the creditor. If the debtor company does not make payment pursuant to the statutory demand, the creditor has a further 30 working days begin to liquidation proceedings against the debtor company, due to non-compliance with the statutory demand as evidence of the debtor’s inability to pay its debts. However, a debtor company can make an application to set aside a statutory demand within 10 working days of being served with it. The Court may set aside the statutory demand if there is a substantial dispute on whether or not the debt is due, if the debtor company has a counterclaim, set-off or cross-demand, or if there are other adequate grounds.



Liquidation involves the realisation and distribution of a debtor company’s assets when the company is insolvent, or does not expect to remain in business. A liquidator is appointed who takes over the management of the company, realises its assets, pays its creditors and distributes the remainder to its shareholders.


Creditors’ compromise

Another option is to enter into a creditors’ compromise with the debtor. A creditors’ compromise is a binding agreement between a debtor company and its creditor(s) regarding the payment of its debts, with terms and conditions that are less exacting than the strict legal rights of creditors. A compromise may involve payments over time, deferred payments, or accepting a lesser sum in full and final settlement of the debt. Once a creditors’ compromise is approved by the required majority of creditors, or the Court, the compromise binds all creditors.


Voluntary administration

The debtor company may go into voluntary administration to maximise the chances of an insolvent company continuing to operate, or if that is not possible, to allow for a better return for creditors than immediate liquidation. It enhances the existing creditors’ compromise procedure as an alternative to liquidation, by imposing a moratorium on creditors taking steps to enforce their debts.


Other alternative processes

The Disputes Tribunal conducts an informal and confidential process run by a referee to encourage both sides to reach an agreement, or make a binding decision if both sides cannot agree. This can be a less costly option, as it avoids lawyers. The Disputes Tribunal can only hear claims for disputed debts of below NZD 15,000 or, if both parties agree to extend the financial limit, to up to NZD 20,000.

Arbitration or mediation (often less expensive than court proceedings) may be used to resolve disputes and obtain more rapid out-of-court settlements.

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