2016 Index of Economic Freedom

New Zealand

overall score81.6
world rank3
Rule of Law

Property Rights95.0

Freedom From Corruption91.0

Limited Government

Government Spending46.0

Fiscal Freedom71.0

Regulatory Efficiency

Business Freedom91.4

Labor Freedom85.9

Monetary Freedom88.1

Open Markets

Trade Freedom87.2

Investment Freedom80.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 4.5 million
  • GDP (PPP):
    • $158.9 billion
    • 3.2% growth
    • 2.2% 5-year compound annual growth
    • $35,152 per capita
  • Unemployment:
    • 5.6%
  • Inflation (CPI):
    • 1.2%
  • FDI Inflow:
    • $3.4 billion
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New Zealand’s modern and competitive economy benefits from a strong commitment to open-market policies that facilitate vibrant flows of trade and investment. Transparent and efficient regulations are applied evenly in most cases, encouraging dynamic entrepreneurial activity in the private sector. Financial markets, although relatively small, provide adequate access to financial resources.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 81.6 (down 0.5 point)
  • Economic Freedom Status: Free
  • Global Ranking: 3rd
  • Regional Ranking: 3rd in the Asia–Pacific Region
  • Notable Successes: Rule of Law, Open Markets, and Regulatory Efficiency
  • Concerns: Control of Government Spending
  • Overall Score Change Since 2012: –0.5

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Background

New Zealand is a parliamentary democracy and one of the Asia–Pacific region’s most prosperous countries. After 10 years of Labor Party–dominated governments, the center-right National Party, led by Prime Minister John Key, returned to power in November 2008. Key was reelected in 2011 and in 2014. Far-reaching deregulation and privatization in the 1980s and 1990s largely liberated the economy. Agriculture is important, but so are a flourishing manufacturing sector, thriving tourism, and a strong geothermal energy resource base. Following a sizable contraction during the global economic recession, the economy has been expanding since 2010.

Rule of LawView Methodology

Property Rights 95.0 Create a Graph using this measurement

Freedom From Corruption 91.0 Create a Graph using this measurement

New Zealand ranked second out of 175 countries surveyed in Transparency International’s 2014 Corruption Perceptions Index. The country is renowned for its efforts to penalize bribery and ensure a transparent, competitive, and corruption-free government procurement system. The judicial system is independent and functions well. Private property rights are strongly protected, and contracts are notably secure.

Limited GovernmentView Methodology

The top income tax rate is 33 percent, and the top corporate tax rate is 28 percent. Other taxes include a goods and services tax and environmental taxes. The overall tax burden equals 32.1 percent of total domestic income. Government spending amounts to 42.4 percent of GDP. The deficit has been reduced to below 2 percent of total domestic output, and public debt equals 34 percent of GDP.

Regulatory EfficiencyView Methodology

Start-up companies enjoy great flexibility under licensing and other regulatory frameworks. With no minimum capital required, it takes only one day to start a business. Flexible labor regulations facilitate a dynamic labor market, increasing overall productivity. New Zealand has the lowest subsidies among OECD countries. It removed all farm subsidies more than three decades ago, spurring development of a vibrant and diversified agriculture sector.

Open MarketsView Methodology

New Zealand’s average tariff rate is 1.4 percent, and non-tariff barriers are low. The government owns shares of companies operating in sectors that include rail transportation, energy, air transportation, and postal services. The financial system has remained stable, and prudent regulations allowed banks to withstand the global financial turmoil with little disruption.

Country's Score Over Time

Bar Graph of New Zealand Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing New Zealand to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Hong Kong88.6-1.0
2Singapore87.8-1.6
3New Zealand81.6-0.5
4Australia80.3-1.1
5Taiwan74.7-0.4
6Japan73.1-0.2
7South Korea71.70.2
8Malaysia 71.50.7
9Macau70.1-0.2
10Brunei Darussalam67.3-1.6
11Thailand 63.91.5
12Kazakhstan63.60.3
13Samoa63.51.6
14Philippines63.10.9
15Vanuatu60.8-0.3
16Azerbaijan60.2-0.8
17Sri Lanka59.91.3
18Tonga59.60.3
19Kyrgyz Republic 59.6-1.7
20Bhutan59.52.1
21Indonesia59.41.3
22Mongolia59.40.2
23Fiji58.8-0.2
24Cambodia57.90.4
25India56.21.6
26Pakistan 55.90.3
27Vietnam542.3
28Maldives53.90.5
29Bangladesh 53.3-0.6
30Papua New Guinea53.20.1
31China52-0.7
32Micronesia51.82.2
33Tajikistan51.3-1.4
34Nepal50.9-0.4
35Laos49.8-1.6
36Burma48.71.8
37Solomon Islands470.0
38Kiribati46.2-0.2
39Uzbekistan46-1.0
40Timor-Leste45.80.3
41Turkmenistan41.90.5
42North Korea2.31.0
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