HSBC Treasury Management Profiles 2018 -

Current section, Introduction

Introduction

New Zealand has a modern and competitive economy that is largely dependent on international trade (exports accounts for about 30 per cent of GDP) and tourism (5.6 per cent of GDP in the year ending March 2016). Economic growth has averaged around 3 per cent over the past three years driven by strong demand for exports, particularly from Australia and China. The New Zealand Treasury has forecast a growth of 3.7 per cent in the year to June 2018. However, the country’s open economy and heavy reliance on exports makes it highly susceptible to economic trends and the fortunes of its trading partners; New Zealand is exposed to protectionist trade policies and slowing Chinese economic growth, for example. Domestically, New Zealanders enjoy high living standards, although GDP per capita is low owing to low labour productivity; the OECD has identified improving productivity as a major long-term challenge for the country. Unemployment remains high, approximately 4.8 per cent in Q2 2017, but a rebound in exports (exports grew 9 per cent year-on-year in August 2017) and a strong tourism sector has seen unemployment fall to its lowest levels since 2008. New Zealand’s government forecasts an NZD2.85 billion budget surplus in the year to June 2018; surplus cash will be invested in infrastructure. The government plans to spend NZD11 billion in infrastructure over the next four years.

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Legal and regulatory

  • Foreign exchange and domestic currency (NZD) accounts can be held by residents both domestically and abroad. Resident domestic currency accounts are freely convertible into foreign currency
  • Non-resident bank accounts are permitted in both foreign and domestic currency. Non-resident domestic currency accounts are convertible into foreign currency
  • A sample of 450 and 1,200 resident companies are required to report transactions with non-residents to Statistics New Zealand on a quarterly and annual basis respectively

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Taxation

  • Resident companies are taxed on their worldwide income
  • Non-resident companies are taxed on their New Zealand-sourced income only
  • The standard rate of corporation tax is 28 per cent

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Payment instruments and systems

  • Cash remains an important payment medium in New Zealand, particularly for low-value retail transactions. Electronic credit transfers are used for both high-value corporate and low-value retail payment transactions. Cheque use is in terminal decline. Payment card use, particularly of credit cards, is high. Mobile payment schemes are available but not widely used at present
  • New Zealand operates five main payment systems: ESAS, an RTGS system; the HVCS, for high-value electronic transfers; BECS, for low-value electronic retail payments; CECS, for banks’ proprietary debit card payments; and the PCS, for paper-based payments

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Cash management

  • Domestic and cross-border notional pooling and cash concentration are permitted
  • Private couriers or collection agencies are used to facilitate collections by delivering invoices and picking up customer payments

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Electronic banking

  • Electronic banking is available in New Zealand. There is no bank-independent electronic banking standard
  • Internet and mobile banking services are provided by all of the country’s banks for both corporate and retail purposes 

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To read the full report on New Zealand and to discover more on these and other topics, including banking and trade, please click on the Download PDF option.

 

Sources:

  • Organisation for Economic Co-operation and Developments: Economic Survey of New Zealand 2017
  • World Bank
  • Statistics New Zealand
  • Ministry of Business, Innovation & Employment
  • The Treasury

The materials contained on this page were assembled in April 2017 (unless otherwise dated).

 

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