A GDP ANALYSIS OF

GROUP 10 (SECTION D)ARIJIT NAYAK 15P189CHANDRIMA DHAR 15P194MIHIR UPASANI 15P212NIDIHIN G THOMAS 15P215SAMBIT DASH 15P225SHIVI SHARMA 15P230VIVEK AGGARWAL 15P240

Macroeconomic Overview• Economy is a free market economy with total GDP of 188.4 billion

dollars(2013).• GDP is growing at a rate of 2.8% and GDP per capita is around 43000

dollars.• Major capital market is New Zealand Exchange which has a total of

258 listed securities with a combined MC of 94.1 billion USD(2014).

GDP Growth GDP per capita

Macroeconomic Overview• Inflation is 0.9% as per consumer prices and unemployment is at 6.2%.• NZ has a sizeable service sector accounting for 63% of all GDP activity in 2013. • Large scale manufacturing industries include aluminium production, food

processing , metal fabrication and wood and paper products.• The primary sector which is agriculture, horticultural, forestry , mining and

fisheries account for 7.6 % of GDP and over 50% of total export earnings.

Inflation Unemployment

GDP and Components (in current US billion $)

2009 2010 2011 2012 2013Gross Domestic Product 120.47 145.29 166.14 174.45 188.38

Final consumption expenditure 93.65 112.42 129.17 135.87 142.50

Gross capital formation 24.00 29.51 34.36 37.38 42.84

Exports of goods and services 34.88 44.36 51.15 50.85 55.09

Imports of goods and services 32.06 40.99 48.55 49.61 51.85

2006 2007 2008 2009 2010 2011 2012 2013 -

20,000,000,000.00 40,000,000,000.00 60,000,000,000.00 80,000,000,000.00

100,000,000,000.00 120,000,000,000.00 140,000,000,000.00 160,000,000,000.00 180,000,000,000.00 200,000,000,000.00

Chart Title

GDP (current US$)

Final Consumption Expenditure ( in current US billion $)

2009 2010 2011 2012 20130.00

20,000,000,000.00

40,000,000,000.00

60,000,000,000.00

80,000,000,000.00

100,000,000,000.00

120,000,000,000.00

140,000,000,000.00

160,000,000,000.00

Final consumption expenditure (Current US $)

2009 2010 2011 2012 2013Final consumption expenditure 93.65 112.42 129.17 135.87 142.50General government final consumption expenditure 23.89 28.72 32.70 33.80 35.61Household final consumption expenditure 69.75 83.69 96.47 102.06 106.89

Final Consumption Expenditure Financial consumption expenditure increased by 2.92

% last year, on an average of 1.47% over last 5 years 76 % of GDP in 2013 compared to 78% of GDP in 2012 Household consumption expenditure increased by

2.87% last year, on average 2.37% over last 5 years Top three household consumption expenditure

categories were housing, food and beverages, and transport

Government consumption expenditure increased by 2.72% last year, on average 1.02% over last 5 years

Gross Capital Formation(current US Billion $)

2009 2010 2011 2012 2013

Gross capital formation (% of GDP) 19.92 20.30 20.68 21.42 22.74Gross capital formation (annual % growth) -12.57 6.90 7.54 5.03 11.13

Gross fixed capital formation 24.53 28.88 33.35 36.87 41.45Gross capital formation (current US Billion $) 24 29.5 34.36 37.37 42.83Gross fixed capital formation (% of GDP) 20.36 19.88 20.074 21.13 22.00

2009 2010 2011 2012 20130

5

10

15

20

25

30

35

40

45

Gross capital formation (current US Billion $)

Gross Capital Formation• Investments in Gross Capital Formation grew to 11.03

percent from 5.03 percent in the same period last year• Investments in Gross Capital Formation grew to 22.74

percent from 21.42 as percentage of GDP in the same period last year

• Investments in Fixed Capital Formation grew to 22 percent from 21.13 as percentage of GDP in the same period last year

• Key Investment areas- Food and beverage manufacturing, Communication and information technology, Infrastructure, Oil and Gas.

Imports and exports• New Zealand's total trade balance was a surplus of $2.3 billion in the

year ended June 2015• Total exports of goods and services were $67.5 billion while total

imports were $65.1 billion.• Top export destinations – Australia ($12.8b), China ($11.8b)• Top sources of imports – European Union ($11.5b), Australia (11.3b)• Top commodities exported – Dairy products, Travel, Meat, Wood• Top commodities imported – Vehicles parts and accessories, Fuel, Oil• Annual growth of import of goods and services (2013) – 8%• Annual growth of exports of goods and services (2013) – 0.3%

Key Findings• Economic expansion has been steady mainly due to Canterbury rebuild program

after devastating earthquakes• Increase in trade can be attributed to rise in dairy prices but they have fallen by

half since the peak in Feb 2014• The CAD has started to widen again after fall in dairy prices and is currently at

3.3% of GDP• The house prices especially in Auckland has increased tremendously increasing

debt to GDP ratio from 57% to 85%• Slowdown in Chinese markets would lead to a hit on trade as it comprises 15% of

exports of NZ• Labour force participation has increased due to increase in immigration which is

1.1% of total population• GHG emissions have fallen very slowly than other OECD countries due to

dependence on agricultural sector for exports

Recommendations• Removing bottlenecks to sustain economic expansion –

Requirement of skilled labour, interest rates for loans, matching supply of houses to demand

• Reducing GHG and water pollution - NZ Emissions Trading Scheme, the main climate policy instrument, should include emissions from agriculture

• Making economic growth more inclusive – Income inequality is still above average for OECD countries

• Reducing net debt to GDP ratio which has risen astronomically in the last 5 years