- Technology-based businesses seem to be shaping a better future for New Zealanders.
- It remains to be seen how well the latest trade initiatives with Vietnam and UAE will help New Zealand strengthen its agriculture sector.
- A further boost in the domestic services sector can be expected from the recently signed Free Trade Agreements.
The New Zealand economy has witnessed a dramatic shift in recent years, especially since the onset of the COVID-19 pandemic. After battling a range of challenges, including labour shortages, border closures and slow economic growth, the country’s economy seems to be gradually moving uphill. In this recovery journey, certain sectors are outpacing others in terms of business performance.
With the pandemic altering the way things work, a cultural reset has taken place among businesses. Technology-based businesses have taken centre stage while bringing a revolution that can shape a better future for New Zealanders.
However, the emergence of several technology-based businesses has been slow and gradual due to the New Zealand economy’s reliance on the dairy and farming sectors. The Kiwi economy is highly dependent on the farming/agriculture sector, which contributes massively to its international exports.
Another industry pushing New Zealand’s growth is the services industry, which drove the rise in its December 2021 quarter GDP. Business services and the retail trade sub-industry within the accommodation, retail trade, and restaurants helped the country’s economy bounce back in the December 2021 quarter after a significant fall in the previous quarter’s GDP.
In the given scenario, one can expect many transformations in the Kiwi economy, which could influence the performance of different sectors. These changes are likely to become more pronounced over the coming months.
Against this backdrop, let us discuss three key sectors that appear to be pulling up the strings of the New Zealand economy despite global market uncertainty:
Financial technology or Fintech has been the epicentre of change in New Zealand. The digitisation of the financial sector has helped bring in higher revenues to the country. As technology innovation expanded, digitisation became one of the country’s highest sources of offshore revenue.
The pandemic-induced lockdowns also gave an unanticipated push to cloud-based financial management and payment systems. Businesses increasingly turned to an online model to stay afloat during the COVID-19 pandemic. Meanwhile, an increased number of Fintech startups, financial service providers, banks and tech firms embraced the push towards a more financially sound economy in New Zealand.
After a spectacular performance during the pandemic, the Fintech sector now seems to be looking at open finance, which could become the standard for consumers’ welfare in the coming months. Open finance is expected to open doors of opportunity to address inequities and help people better manage their finances. If done right, open finance could redefine the way New Zealanders lend, borrow, spend, save, store and transfer money.
The agricultural sector has been one of the most integral components of the domestic GDP creation in New Zealand. The country’s freshly announced trade initiatives with Vietnam and the UAE have taken its agricultural strength a step ahead. New Zealand has recently pledged to boost agriculture cooperation with Vietnam and bolster its collaboration with the UAE in the areas of agricultural technology.
These initiatives seem to have brought export centric policies to the forefront, underlining the agriculture sector’s potential to expand in a highly efficient way. Meanwhile, one cannot neglect that the country’s farming sector is already backed by cutting-edge technology, robust and safe agrarian practices and high-quality products. Thus, the integration of agricultural channels across New Zealand and other partner countries opens the gateway to a greater number of consumers abroad.
The latest trade initiatives with Vietnam and the UAE could boost the competence of the agricultural sector. As domestic products enter foreign markets, they would have to meet the quality and regulatory requirements mandated by the foreign government. Additionally, as the playfield expands, products need to be of higher quality to stand apart in the market.
The domestic services sector seems well-positioned to be revamped in the coming months, especially after the UK-New ZealandFree Trade Agreement. As per the Kiwi government, the UK is an important services market for New Zealand.
In the year to March 2020, New Zealand exported NZ$1.67 billion of services to the UK and imported NZ$1.18 billion worth of UK services. The government believes that services commitments will help facilitate and provide certainty of access and regulatory conditions for services exporters.
To deepen international integration, New Zealand has also upgraded its Free Trade Agreement with China. The trade deal is set to benefit services exporters, which would benefit from increased access to China’s services market, including environmental services, airport, and ground handling services.
The New Zealand economy has been observing some crucial changes in different sectors. A dynamic shift towards more technologically advanced productions processes is benefitting a range of industries. Meanwhile, the agriculture sector seems well-positioned to benefit from trade initiatives with other nations. From an export centric view, the services sector could see a growing market on the back of Free Trade Agreements.