Australia/New Zealand

Australia / New Zealand

Region: Australia

Australia’s abundant and diverse natural resources attract high levels of foreign investment and include extensive reserves of:

• Coal
• Iron ore
• Copper
• Gold
• Natural gas
• Uranium
• Renewable energy sources

Major investments — such as the US$40 billion Gorgon LNG project — are set to significantly expand the resource sector. In addition, Australia boasts a large services sector and is a major exporter of natural resources, energy, and food.

The country supports open trade and the Doha Round of multilateral trade negotiations, particularly in agriculture and services. Prior to the global financial crisis, the Australian economy grew for 17 consecutive years.

In response to the crisis, the Rudd government introduced a US$50 billion stimulus package, while the Reserve Bank cut rates to historic lows. Thanks to these actions and continued Chinese demand for commodities, Australia experienced only one quarter of negative growth, followed by a 1.2% rebound in 2009 — the best in the OECD at the time.

Unemployment peaked at 5.7% in 2009 and dropped to 5.1% in 2010. The budget deficit was expected to peak below 4.2% of GDP, with a return to surplus projected as early as 2015.

The GILLARD government emphasized productivity, managing Australia’s critical but complex relationship with China. Australia remains active in Trans-Pacific Partnership (TPP) talks and in free trade negotiations with China, Japan, and Korea.

Region: New Zealand

Over the last 20 years, New Zealand transitioned from a primarily agrarian economy into a modern, globally competitive, free-market economy. This transformation has:

• Boosted real incomes
• Expanded the industrial sector’s technological capacity
• Broadened global competitiveness

From 1997–2007, per capita income rose consistently in purchasing power parity terms. However, 2008–09 saw a decline. The economy was largely driven by debt-fueled consumer spending in the early 2000s, leading to a large balance of payments deficit.

Rising inflation led the central bank to steadily raise interest rates from 2004 through 2008 — eventually placing them among the highest in the OECD. This attracted international capital, which boosted the currency and housing market, while worsening the current account deficit.

The economy entered recession before the global financial crisis, contracting for five consecutive quarters from 2008–09. In response, the central bank aggressively cut interest rates, and the government implemented fiscal stimulus programs.

New Zealand’s economy shrank 1.7% in 2009 but recovered with 2.1% growth in 2010. However, key trade sectors remain sensitive to external demand fluctuations. The government continues to prioritize:

• Productivity growth
• Infrastructure development
• Controlling government spending

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