1. Market Research
  2. > Pharmaceutical Market Trends
  3. > New Zealand Country Risk Report Q1 2016

New Zealand Country Risk Report Q1 2016

  • December 2015
  • -
  • Business Monitor International
  • -
  • 41 pages

Core Views

The New Zealand economy is experiencing a gradual deleveragingcycle, which will weigh on real GDP growth over the coming years.While declining oil prices will provide some support to corporateprofit margins and economic activity, these positives will likely beoffset by the joint deterioration in the dairy and construction sectors,which remain the two key pillars of the economy.New Zealand's fiscal accounts remain in better health comparedwith most developed market economies. The government posteda budget surplus equivalent to 0.3% of GDP for FY2014/15 (July-June), fulfilling its promise made in 2011 to return the government'saccounts to positive territory by FY2014/15. We expect the country'sfiscal surplus to continue growing over the coming years, and thiswill be supported by continued spending restraint, which should keepgovernment spending relative to GDP stable even as the welfareburden grows.Following cuts totalling 75 basis points (bps) since its June monetarypolicy meeting, we are forecasting the Reserve Bank of New Zealand(RBNZ) to cut its official cash rate (OCR) by 25 basis points (bps)to 2.50% by Q116 as a result of a weak economy. With inflationremaining below its medium-term target of 2.0%, the central bankwill also be pressured to ease interest rates in an attempt to spurinflation.

Despite the gradual improvement since 2008, New Zealand's externalaccounts remain the economy's weak link and a persistent currentaccount deficit poses risks of large-scale capital outflow. In orderto correct these imbalances, we will need to see domestic savingsrise sharply, while investment growth cools, which will undermineeconomic growth to some extent.We forecast the New Zealand dollar to fall against the US dollarover the medium term, and to weaken to USD0.5500/NZD by theend of 2016 as a result of declining real interest rates amid slowingeconomic activity, coupled with elevated level of external indebtedness.Major Forecast ChangesThe RBNZ remains dovish, despite choosing to keep its OCRsteady at 2.75% at its latest October monetary policy meeting, andwe forecast the central bank to ease its benchmark policy rate by25bps to 2.50% in light of a worsening economy and inflation thatis running below its medium-term target.We now forecast the New Zealand dollar to depreciate towardsUSD0.5500/NZD by the end of 2016 (versus USD0.6200/NZD previously).The New Zealand dollar will continue to face fundamentaldownside pressure as real interest rate expectations fall. Meanwhile,New Zealand's current account deficit continues to worsen, and weforecast it to narrow only slightly to 3.0% in 2015 and 2.5% in 2016.We do not believe that this will be sustained as foreign investorsbecome unwilling to fund the country's large current account deficitin light of weakening growth and property market weakness.

Table Of Contents

New Zealand Country Risk Report Q1 2016
Executive Summary 5
Core Views5
Major Forecast Changes5
Key Risks5
Chapter 1: Political Outlook 7
SWOT Analysis 7
BMI Political Risk Index 7
Domestic Politics 8
TPP Ratification To Be Delayed Until 20178
The failure of New Zealand to obtain the concessions it sought for dairy and pharmaceuticals suggest that the ratification of the TPP will
face opposition within the country
TABLE: POLITICAL OVERVIEW8
Long-Term Political Outlook 9
Stability To Prevail, But Not Without Challenges9
New Zealand is likely to remain one of the most stable states in the world over the coming decade The government's main challenges
are to rein in the budget deficit, improve the business environment to attract greater foreign investment and raise opportunities for the
indigenous Maori population
Chapter 2: Economic Outlook 13
SWOT Analysis 13
BMI Economic Risk Index 13
Economic Growth Outlook 14
Worst Not Over For Economy And NZD14
We expect the New Zealand dollar to face continued fundamental downside pressures, its fragile external accounts leaving it exposed to
capital outflows as real interest rates decline
GDP By Expenditure Outlook 15
TABLE: GDP GROWTH FORECASTS15
TABLE: PRIVATE CONSUMPTION FORECASTS15
Currency Forecast 16
NZD To Remain In Bear Market Through 201616
The New Zealand dollar will head lower against the US dollar over the next 12 months, and we forecast the currency to weaken to
USD05500/NZD by the end of 2016
TABLE: GOVERNMENT CONSUMPTION FORECASTS16
TABLE: FIXED INVESTMENT FORECASTS16
TABLE: NET EXPORTS FORECASTS16
TABLE: BMI CURRENCY FORECAST17
Outlook On External Position 18
TABLE: MAIN EXPORT AND IMPORT PARTNERS18
TABLE: MAIN EXPORTS AND IMPORTS18
TABLE: CAPITAL and FINANCIAL ACCOUNT BALANCE 18
Fiscal Policy and Public Debt Outlook 19
Fiscal Surplus To Remain Intact Amid Prudent Spending19
New Zealand's fiscal accounts returned to a surplus in FY2014/15 (July-June), and we forecast it to rise to 06% of GDP in FY2015/16
as the government remains committed to restraining spending This marks the first surplus since 2008, and the National-led government
will continue to grow this surplus with the aim of building a buffer against any potential global economic shock
Structural Fiscal Position 20
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES20
Monetary Policy 21
NZD Bear Market Intact Amid Looming RBNZ Easing21
Continued downside risks to economic growth amid weak dairy prices and worsening weather conditions, coupled with a rising
unemployment rate, are likely to trigger the Reserve Bank of New Zealand to cut its official cash rate by 25bps to 250%
Monetary Policy Framework 22
Chapter 3: 10-Year Forecast 23
The New Zealand Economy To 2024 23
New Zealand - Q1 201623
The main factors that contributed to New Zealand's solid real GDP growth outturn over the past decade will not be in play to the same
degree over the next 10 years Population growth will slow, terms of trade support will be hard to come by, and we expect New Zealand
households will eventually experience a protracted deleveraging cycle
TABLE: LONG-TERM MACROECONOMIC FORECASTS23
Chapter 4: Operational Risk 25
SWOT Analysis 25
Operational Risk Index 25
Operational Risk 26
TABLE: DEVELOPED STATES - LABOUR MARKET RISK26
TABLE: DEVELOPED STATES - LOGISTICS RISK29
TABLE: DEVELOPED STATES - CRIME AND SECURITY RISK32
TABLE: DEVELOPED STATES - TRADE AND INVESTMENT RISK35
Chapter 5: BMI Global Macro Outlook 39
Global Outlook 39
Emerging Markets Bending, Not Breaking39
TABLE: GLOBAL ASSUMPTIONS39
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %40
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, % 40
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %41

View This Report »

Get Industry Insights. Simply.

  • Latest reports & slideshows with insights from top research analysts
  • 24 Million searchable statistics with tables, figures & datasets
  • More than 10,000 trusted sources
24/7 Customer Support

Talk to Ahmad

+1 718 618 4302

Purchase Reports From Reputable Market Research Publishers
2016 Immunodiagnostic Analyzers and Reagents in 33 Countries: Supplier Shares and Strategies, Sales Segment Forecasts for 100 Special Chemistry, Drug of Abuse, Endocrine Function, Immunoprotein, Therapeutic Drug Monitoring, and Tumor Marker Tests,  Opport

2016 Immunodiagnostic Analyzers and Reagents in 33 Countries: Supplier Shares and Strategies, Sales Segment Forecasts for 100 Special Chemistry, Drug of Abuse, Endocrine Function, Immunoprotein, Therapeutic Drug Monitoring, and Tumor Marker Tests, Opport

  • $ 47500
  • Industry report
  • October 2016
  • by Venture Planning Group

This new 33-company survey from VPGMarketResearch.com contains 1,650 pages and 890 tables. The report provides a granular strategic analysis of over 100 clinical chemistry, TDM, endocrine, cancer, immunoprotein ...

2016 Tumor Markers in 32 Countries: Supplier Shares and Strategies, Sales Segment Forecasts by Test--Oncogenes, Biochemical Markers, Lymphokines, GFs, CSFs, Hormones, Immunohistochemical Stains--Emerging Technologies, Opportunities for Suppliers

2016 Tumor Markers in 32 Countries: Supplier Shares and Strategies, Sales Segment Forecasts by Test--Oncogenes, Biochemical Markers, Lymphokines, GFs, CSFs, Hormones, Immunohistochemical Stains--Emerging Technologies, Opportunities for Suppliers

  • $ 47400
  • Industry report
  • October 2016
  • by Venture Planning Group

This new 33-country survey from VPGMarketResearch.com contains over 1,300 pages and 500 tables. The survey is designed to assist diagnostics industry executives, as well as companies planning to diversify ...

2016 Cancer Diagnostic Testing Analyzers and Reagents in 33 Countries: Supplier Shares and Strategies, Sales Segment Forecasts by Tumor Marker--Oncogenes, Biochemical Markers, Lymphokines, GFs, CSFs, Hormones, Immunohistochemical Stains--Technology Trends

2016 Cancer Diagnostic Testing Analyzers and Reagents in 33 Countries: Supplier Shares and Strategies, Sales Segment Forecasts by Tumor Marker--Oncogenes, Biochemical Markers, Lymphokines, GFs, CSFs, Hormones, Immunohistochemical Stains--Technology Trends

  • $ 47400
  • Industry report
  • October 2016
  • by Venture Planning Group

This new 33-country survey from VPGMarketResearch.com contains over 1,300 pages and 500 tables. The survey is designed to assist diagnostics industry executives, as well as companies planning to diversify ...


ref:plp2015

Reportlinker.com © Copyright 2016. All rights reserved.

ReportLinker simplifies how Analysts and Decision Makers get industry data for their business.