Growing tourism numbers, the various business benefits of the Trans-Pacific Partnership (TPP), and an increased investment in environmental protection are already beginning to shape New Zealand’s economic trends for the coming year. How these trends will be managed, and in particular how the government will navigate the intersection between economic growth and environmental protection, remain to be seen.
The arrival of the TPP will bring widespread tariff cuts between participating nations, creating advantageous export conditions for NZ farmers. For example, TPP terms will help squash growers recover more than NZ $1.5 million a year from the tariff – the equivalent of $50,000 per farmer. Cherries, wine and beef are among the other exports in the food and beverage sector that are expected to see significant growth due to the tariff cuts.
Tourism and the Green Investment Fund
This further integration of New Zealand’s trade economy with others in the region is mirrored by the country’s growing tourist numbers. Tourism spending reached $39.1 billion over the most recent 12-month period on record – a 7.7% increase from the previous year.
These numbers reflect increases in both international and domestic tourism spending. International spending accounted for over $16 billion of the total amount, up nearly 10% from the previous year. The remaining $22 billion came from domestic spending, which saw an increase of $1.4 billion dollars over the prior 12-month period.
Tourism, however, has consequences for the environment – both in terms of air travel and the effect of large crowds in natural settings. Despite the importance of the industry to New Zealand’s economic fortunes, some are calling for an increase in the tourist tax. Such a move could bring down the visitor count somewhat, particularly during the high season, while also raising extra money that could be re-invested in environmental causes.
The environment is very much on the minds of New Zealand officials. Recently, Prime Minister Jacinda Ardern, announced a $100 million initiative called the Green Investment Fund. This environmental campaign aims to provide financial backing for businesses making the switch to cleaner practices. By offering a genuine incentive for a cross-sector move toward sustainable technology, the government expects to attract additional investors as well.
“This fund means the Government is bringing cash and know-how to the table to partner with business to deliver a clean, green future for everyone,” Ms Ardern said.
New Zealand’s climate minister, James Shaw, added: “This fund will bring financial and technical emissions reductions and expertise together with the sole aim of increasing investment in low emissions projects.”
Sustainable growth for the years ahead
If New Zealand is able to strike the right balance between growth and sustainability, other countries may follow suit. Many uncertainties remain, of course – and although the fundamentals are in place, the coming years may reveal bumps along the road.
Concern remains regarding the continuing saga of the US-China trade relationship, as well as China’s own Belt and Road Initiative. Either of these situations could result in a change in New Zealand’s economic relationship with the outside world.
Nevertheless, the steadily growing New Zealand economy shows great promise for the New Year, and the new era it is beginning to enter. Effective leadership will be necessary to steer the ship through the adjustments that the new TPP will impose, as well as make the right decision regarding the balance between tourism and the environment.
With 2019 approaching, the country finds itself in a better position than most – with the opportunity to present itself as a model for the world, on how to make a responsible transition to a clean economy.