2020 Index of Economic Freedom

New Zealand

OVERALL SCORE84.1
WORLD RANK3
Rule of Law

Property Rights93.3

Judicial Effectiveness79.1

Government Integrity93.9

Government Size

Tax Burden71.0

Government Spending57.8

Fiscal Health98.3

Regulatory Efficiency

Business Freedom90.4

Labor Freedom86.7

Monetary Freedom87.0

Open Markets

Trade Freedom92.2

Investment Freedom80.0

Financial Freedom80.0

Create a Comparison Chart

See how New Zealand compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 4.9 million
  • GDP (PPP):
    • $197.8 billion
    • 3.0% growth
    • 3.4% 5-year compound annual growth
    • $40,135 per capita
  • Unemployment:
    • 4.5%
  • Inflation (CPI):
    • 1.6%
  • FDI Inflow:
    • $1.4 billion

New Zealand’s economic freedom score is 84.1, making its economy the 3rd freest in the 2020 Index. Its overall score has decreased by 0.3 point, with small declines in scores for property rights, judicial effectiveness, and government integrity slightly offsetting an improved government spending score. New Zealand is ranked 3rd among 42 countries in the Asia–Pacific region, and its overall score is well above the regional and world averages.

The economy of New Zealand has ranked as one of the freest in the world over the past 25 years. Steady GDP growth reflects that outstanding performance.

The only significant area for improvement that would lead to even more economic freedom is the ongoing problem of too much government spending. Unfortunately, progress in this area is not likely in the short term because the center-left government has announced a “well-being” budget to fund many new welfare programs.

Close

Background

The former British colony of New Zealand is one of the Asia–Pacific region’s most prosperous countries. Elections in 2017 resulted in a hung parliament, with the “kingmaker” and populist New Zealand First party subsequently forming a minority coalition, enabling new Prime Minister Jacinda Ardern’s center-left Labor Party to return to power. Far-reaching deregulation and privatization since the 1980s have largely liberated the economy. Agriculture is important, as are manufacturing, tourism, and a strong geothermal energy resource base. The trade war between the U.S. and China is of concern to New Zealand, especially given its heavy reliance on China for export revenue. New Zealand’s economy has been expanding since 2010.

Rule of LawView Methodology

Property Rights 93.3 Create a Graph using this measurement

Judicial Effectiveness 79.1 Create a Graph using this measurement

Government Integrity 93.9 Create a Graph using this measurement

Private property rights are strongly protected, and New Zealand ranks among the world’s top countries for security of contracts. The judicial system is independent and functions well. New Zealand ranked second out of 180 countries surveyed in Transparency International’s 2018 Corruption Perceptions Index and is renowned for its efforts to ensure a transparent, competitive, and corruption-free government procurement system.

Government SizeView Methodology

The top individual income tax rate is 33 percent, and the top corporate tax rate is 28 percent. Other taxes include goods and services and environmental taxes. The overall tax burden equals 32.0 percent of total domestic income. Government spending has amounted to 37.5 percent of the country’s output (GDP) over the past three years, and budget surpluses have averaged 0.8 percent of GDP. Public debt is equivalent to 29.4 percent of GDP.

Regulatory EfficiencyView Methodology

The regulatory framework is efficient. The labor market has tightened after a prolonged period of record population growth. In April 2019, the Labor Party–led government raised the minimum wage to NZD 17.70 (USD 12.04); the party campaigned on raising it to NZD 20 (USD 13.60) by April 2021. Subsidies are the lowest among OECD countries, and this has spurred the development of a vibrant and diversified agriculture sector.

Open MarketsView Methodology

The total value of exports and imports of goods and services equals 54.2 percent of GDP. The average applied tariff rate is 1.4 percent, and 243 nontariff measures are in force. There are very few limitations on investment activity, and foreign investment has been actively encouraged. The well-developed financial sector offers a wide range of financing instruments. Overall financial regulations are prudent and transparent.

Country's Score Over Time

View Chart of Scores over Time

Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Singapore89.40.0
2Hong Kong89.1-1.1
3New Zealand84.1-0.3
4Australia82.61.7
5Taiwan77.1-0.2
6Malaysia 74.70.7
7South Korea741.7
8Japan73.31.2
9Macau70.3-0.7
10Kazakhstan69.64.2
11Thailand 69.41.1
12Indonesia67.21.4
13Brunei Darussalam66.61.5
14Philippines64.50.7
15Fiji63.41.2
16Kyrgyz Republic 62.90.6
17Bhutan62.1-0.8
18Samoa62.1-0.1
19Vanuatu60.74.3
20China59.51.1
21Vietnam58.83.5
22Tonga58.81.1
23Papua New Guinea58.40.0
24Sri Lanka57.41.0
25Cambodia57.3-0.5
26Uzbekistan57.23.9
27Maldives56.53.3
28India56.51.3
29Bangladesh 56.40.8
30Mongolia55.90.5
31Laos55.5-1.9
32Pakistan 54.8-0.2
33Afghanistan54.73.2
34Nepal54.20.4
35Burma540.4
36Solomon Islands52.9-1.7
37Tajikistan52.2-3.4
38Micronesia520.1
39Turkmenistan46.5-1.9
40Timor-Leste45.91.7
41Kiribati45.2-2.1
42North Korea4.2-1.7
See Entire Region List ›

View all countries ›

Back to Top