General

Agriculture is the mainstay of the economy, although industry employs more people. The agricultural sector has diversified from a reliance on sheep raising to such additional enterprises as dairying, forestry, and horticulture. The principal exports are wool, meat, dairy products, fish, fruit and timber products. Small amounts of coal, gold, iron and natural gas are also produced. Food processing is the largest manufacturing industry; and there is a variety of small light-manufacturing industries. Beginning in the 1980s, New Zealand transformed its highly protected and regulated economy into one that was much more privatised, market oriented and deregulated.

The economy has been subjected to two major crises in last 30 years: first, in 1968, the loss of the protected market for its agricultural goods when the United Kingdom joined the European Community (now the European Union) and second, inflation and stagnation in the early 1980s in the aftermath of the second international oil shock. The first produced a government-led program to transform the economy into an independent, more industrialised competitor in the world market, and the second, a neo-liberal transformation of the economy combining a strict monetary regime to eliminate inflation, liberalisation of the country's trade and investment regimes, and deregulation and privatisation of the domestic economy. The liberalisation and stabilisation program transformed New Zealand from a heavily protected and regulated economy to one of the most market-oriented and open in the world. By 1996, New Zealand was posting annual growth rates in real GDP of 5–6%, surpluses in the government's budget, and a per capita GDP in line with those of the big European economies. Subsequent disruptions, however, resulting in declines in industrial production and per capita income, have raised concerns that the gap is no longer closing. The Asian financial crisis erupting in the second half of 1997 helped lower annual growth to 3.1% in 1997, and, combined with a summer drought, push the economy into recession in the first half of 1998. The economy recovered sufficiently to register a positive 1.9% growth for 1998, and 3.5% in 1999. Despite increased fuel cost that sent inflation to 4% in 2000 (outside the government's target range of 0 to 3%), real GDP growth improved to 4.6%.

The global slowdown in early 2001, exacerbated by the effects of the 11 September 2001 terrorist attacks on the United States, had a relatively mild impact on New Zealand's economy, reducing real GDP growth to 2.3%. While inflation moderated to 2.1% the government continued operating in the black with an operating surplus and positive returns from state enterprises, although the budget surplus has been steadily declining from 2.6% of GDP in 1999/98 to 0.8% of GDP in 2000/01. Part of the operating surplus fed the first contribution in 2002 to the New Zealand Superannuation (NZS) Fund established in 2001. The NZS is an investment fund designed to generate money to assure that public pensions are covered for the country's aging population. The current account deficit, a combination of a small merchandise trade surplus and a large deficit on investment income, fell from 7% of GDP to 4.8% of GDP in 2001. Gross public debt fell from 36% of GDP in 1999 to 30% of GDP in 2002, in line with the target set by government planners.