Economic Analysis
New Zealand

New Zealand

Population 5.1 million
GDP per capita 48,317 US$
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  2020 2021 2022 (e) 2023 (f)
GDP growth (%) -2.1 5.6 2.3 0.8
Inflation (yearly average, %) 1.7 3.9 7.2 5.1
Budget balance (% GDP) -7.2 -1.3 -2.7 -1.6
Current account balance (% GDP) -0.8 -6.0 -7.7 -6.0
Public debt (% GDP) 43.2 50.8 56.6 58.6

(e): Estimate (f): Forecast *Fiscal year 2023: July 2022-June 2023


  • Proximity to Asia and Australia
  • Attractive tourist destination
  • Large and competitive agricultural sector (world’s leading exporter of dairy products)
  • Contained public debt
  • High quality of life
  • Excellent business environment


  • Island nation
  • Reliance on foreign investment and capital
  • High household and corporate debt levels (especially in agriculture)
  • Reliance on Chinese demand
  • Shortage of skilled labour
  • Lack of R&D and low labour productivity growth compared to other OECD countries
  • Environmental issues, notably due to the importance of the intensive agriculture
  • Socio-economic inequalities between Maoris and non-Maoris despite Prime Minister Ardern’s commitments on this issue


Sluggish economic growth is expected

Despite the lifting of most COVID-related restrictions in September 2022, the economy is set to decelerate further in 2023 amid high inflation and rising interest rates. Fuelled by food, energy, and housing prices, inflation reached a three-decade high in the second quarter of 2022. While the increase in prices will decelerate in 2023, second-round effects from higher prices the preceding year will drive inflation. It is expected to continue to affect consumer confidence, which hit an all-time low in mid-2022 and, in turn, household consumption (57% of GDP). In addition, the high level of household indebtedness (173% of disposable income in Q2 2022), declining housing prices, and slower population growth due to lower immigration since the pandemic, will also constrain private consumption growth. In the face of accelerating inflation, the Reserve Bank of New Zealand (RBNZ) started to increase interest rates in late 2021. Following the invasion of Ukraine by Russia, the central bank became more aggressive, increasing the size of hikes first from 25 bps to 50 bps and then to 75 bps, with the policy rate standing at 4.25% at 10 January 2023. With inflation expected to remain high, RBNZ could be prompted to make additional hikes in 2023. Rising interest rates and the housing market downturn will impact investment, the growth of which is expected to slow. Gross fixed capital formation should be boosted by public investment in infrastructure projects, including in transport. Exports of services should recover as tourism (14% of GDP, 16% of jobs in 2019) rebounds gradually after the country allowed fully vaccinated international travellers to enter the country in August 2022. Exports of goods, however, could take a hit from the global economic slowdown, with China and the US accounting respectively for 32.5% and 10.5% of the total in 2021. In addition, recession risks in Europe loom on exports prospect the (EU and UK represented 8.6% of goods exports in 2021).


A durably sizeable current account deficit

After higher expenses resulting from the Delta and Omicron outbreaks during FY2022, the government is set to return to the path of fiscal consolidation in FY2023. The budget for the year ending in June 2023 reveals lower expenditures, despite durably high spending on health (15% of the total) and the introduction of a USD 1 billion cost of living package to support low and middle incomes amid rising inflation. In the longer term, the government aims to post fiscal surpluses from 2024 and 2025. While public debt should increase, its share relative to GDP will remain relatively low compared to most developed economy peers. 

The current account deficit is expected to remain high in 2023. With export growth to decelerate, the trade deficit should continue to weigh on the current account, while persistently elevated energy prices will support the import bill. Meanwhile, the deficit in the trade of services is likely to narrow as easing border restrictions will support tourism receipts. The income account, structurally in deficit due to profit repatriation by foreign investors and debt servicing costs (external debt accounted for 88% of GDP in 2021) should remain sizeable. The current account deficit is traditionally financed by large financial and capital inflows, mostly in the form of portfolio investment.


Torn between economic stakes and democratic values regarding China

New Zealand is a stable parliamentary democracy with strong institutions. Rewarded for its management of the crisis in the parliamentary elections in 2020, the Labour Party obtained an absolute majority in Parliament. While its leader Jacida Ardern conserved the highest share with 40% of poll respondents in September 2022 mentioning her as their “preferred Prime Minister”, ahead of Christopher Luxon (the leader of the National Party and leader of the Opposition), she resigned in January 2023. Chris Hipkins was then was sworn in to succeed her. While his results in the first polls since he became PM were similar the lasts of Ardern, the tight advantage over the opposition suggest a loss of seats in the forthcoming elections. In 2022, local elections resulted in the Labour Party party losing in two major cities, Auckland and Wellington. 

As far as foreign affairs are concerned, the country has chosen to maintain a friendly stance towards China. Despite rising tensions between the latter and the US, with which New Zealand has a security alliance, and Taiwan, the country has attempted to maintain a balanced stance vis-à-vis Beijing given its strong economic ties with the second-world economy. That being said, it was among the signatories of a statement presented at the UN Committee on Human Rights calling for China to respond to findings of human rights violations against the Uyghur in Xinjiang. Regarding the invasion of Ukraine by Russia, New Zealand condemned the Kremlin’s actions and introduced sanctions in April 2022. Additional measures focusing on the defence and security sectors were implemented in October. 


Last updated: February 2023


Primary payment methods in New Zealand consist of card (debit card and credit card) and electronic credit or debit (direct debits and credits, automated bill payments and electronic transfers). There has been a rapid increase in the use of contactless payments, mobile phone-based applications, and payments using the internet. Although cash remains important, its use is reducing significantly 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 New Zealand’s banks are connected to the SWIFT network.

Debt Collection

The debt collection process usually begins with serving a letter of demand, where the creditor notifies the debtor of their payment obligations (including any contractual interest due) with a time limit for making the payment.


Summary judgment proceedings

If the creditor does not receive payment after issuing a letter of demand, a next possible step is to issue summary judgment proceedings. This procedure is intended for situations where the debtor has no defence against the claim. An application can be made to the District Court or High Court, depending on the value of the claim. The District Court has jurisdiction to hear matters for claims up to NZD 350,000, and the High Court typically hears matters for claims above NZD 350,000. 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 a company, an individual with personal knowledge of the facts who is authorised to submit an affidavit on behalf of the company), which sets out the facts of the claim. A summary judgment typically involves a hearing, which lasts around one day (if the debtor raises a defence), 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 full hearing although an appearance in Court to call the matter will be required. 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 used where summary judgment is unavailable because the debtor has raised a genuine defence, or if summary judgment is not granted. Ordinary proceedings are initiated by filing a notice of proceeding and a statement of claim. Depending on the value of the claim (as outlined above), these proceedings can take place in the District Court or the High Court. Unlike summary judgment, an ordinary defended proceeding may involve additional processes, such as discovery, hearing of evidence and interlocutory applications, or serving of briefs of evidence, depending on the nature of the proceeding.



The High Court determines appeals from the District Court. The Court of Appeal has jurisdiction to hear appeals from the High Court. Appeals are generally restricted to questions of law only. Appeals to the highest appellate court in New Zealand, the Supreme Court, can only be heard with leave of that Court. Leave will be granted if the Supreme 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 as outlined above), seeking enforcement action. This 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 against a debtor and that debtor is an individual, the creditor can issue a bankruptcy notice served on the debtor. Failure by the debtor to comply with a bankruptcy notice is considered by the law to be an act of bankruptcy.


Statutory demand

If the debtor does not make payment pursuant to the letter of demand and that debtor is a company, a further potential step is for the creditor to prepare and serve a statutory demand for the outstanding debt. This can be used as an alternative to summary judgment or ordinary proceedings. A statutory demand can only be issued if there is no substantial dispute over the debt. Once the statutory demand is served on the debtor, 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 to commence liquidation proceedings against the debtor company, using non-compliance with the statutory demand as evidence of the debtor’s inability to pay its due 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 as to 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 to do so.



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 to the company, who takes over the management of the company, realises its assets, pays its creditors and distributes the remainder to its shareholders.


Creditors’ compromise

There are two potential forms of creditors compromise, either an informal agreement between debtor and creditor, or a formal creditors’ compromise under the Companies Act 1993. A formal 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. An equivalent procedure exists for individuals under the Insolvency Act 2006.


Voluntary administration

The debtor company may go into voluntary administration to try and 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.


Business Debt Hibernation

The business debt hibernation is a scheme established to help businesses affected by COVID-19. It enables businesses to gain protection from debt recovery actions for a month while they negotiate with creditors, and a further six months’ protection if creditors agree to an arrangement for repayment. The scheme has a number of conditions that must be fulfilled before a business can enter business debt hibernation.


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. At the first instance, this is typically a less costly option, as it avoids lawyers. However, 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, of up to NZD 20,000.

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

Insolvency trend - New zealand
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