Our comprehensive assessment of New Zealand's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect New Zealand, as well as the latest industry developments that could impact New Zealand's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in New Zealand before your competitors.
New Zealand Country Risk
The New Zealand economy is experiencing a gradual deleveraging cycle, which will weigh on real GDP growth over the coming years. While declining oil prices will provide some support to corporate profit margins and economic activity, these positives will likely be offset by the joint deterioration in the dairy and construction sectors, which remain the two key pillars of the economy.
New Zealand's fiscal accounts remain in better health compared with most developed market economies. The government posted a budget surplus equivalent to 0.3% of GDP for FY2014/15 (July-June), fulfilling its promise made in 2011 to return the government's accounts to positive territory by FY2014/15. We expect the country's fiscal surplus to continue growing over the coming years, and this will be supported by continued spending restraint, which should keep...
New Zealand Industry Coverage (14)
New Zealand Agribusiness
BMI View: We believe that increased access to international markets, particularly Taiwan and China, will prove to be the prime growth driver for the agribusiness sector in New Zealand over the medium-to-long term. This will be supportive for both the dairy and livestock segments. The dairy sector in particular will benefit from export demand growth, as many other countries in Asia are facing growing domestic demand and relatively limited production capacity. However, the dairy sector will suffer over the short term due to low prices on the international market. We believe prices will pick up again later in 2016.
New Zealand Autos
BMI View: We continue to believe that a combination of a slowing agricultural sector and a weakening New Zealand dollar will lead to a slight slowdown in New Zealand's new vehicle sales market in 2016. We are targeting 3.5% sales growth for the sector as a whole in 2016, down slightly from our forecast of 3.8% growth last quarter.
|Passenger Car and Light Commercial Vehicle Sales|
|f = BMI forecast. Source: NZTA, BMI|
New Zealand Commercial Banking
|Date||Total assets||Client loans||Bond portfolio||Other||Liabilities and capital||Capital||Client deposits...|
Food & Drink
New Zealand Food & Drink
BMI View: New Zealand's food and drink industry will experience robust growth throughout our forecast period to 2020, especially given existing sector maturity. Nonetheless, a small consumer base combined with a high degree of consolidation will limit room for new players.
|Food & Drink Spending|
|f = BMI forecast. Source: BMI, national statistics|
Latest Updates & Industry Developments
New Zealand Infrastructure
BMI View: Growth in New Zealand's small construction industry will moderate over the next decade as the Christchurch rebuilding slows from its peak in 2015. An inflated housing market presents downside risks to the key residential construction sector, though the upwards building trend remains in place. The roads sector is booming, energy and utilities may require capacity expansion in the medium term and social infrastructure is providing several PPP opportunities.
Latest Updates And Structural Trends
After good growth in the previous decade, the construction industry will moderate over 2016-2025. Construction industry value...
New Zealand Insurance
BMI View: We retain our view that the New Zealand insurance market is comparatively small by global standards and a subdued domestic economic outlook weighs in on premium growth prospects, in both the life and non-life sector through our forecast period out to 2020. The strengthening of the American dollar against the New Zealand dollar will also constrain dollar denominated premiums in both 2016 and 2017. We estimate that over the longer term, demand for key non-life lines, such as property and motor, will continue to remain high. However, we believe that demand for life productions, the smaller market at present, is expected...
New Zealand Medical Devices
BMI View : The strengthening of the US dollar has already affected import performance from the USA, the country's main supplier, and we maintain this trend will continue in the medium term, with a -0.6% CAGR market growth expected for the 2014-2019 period. The District Health Boards' focus on cost efficiency and a stronger policy on medical device reimbursement are likely to affect the growth prospects of the New Zealand medical device market in 2016 and beyond.
Oil & Gas
New Zealand Oil & Gas
BMI View: Limited scope for new oil and gas will maintain the long-term downtrend in New Zealand's hydrocarbon production over the next 10 years. Declining gas production is a particular concern as the country does not have any gas import infrastructure to make up for diminishing local volumes via imports. New Zealand will remain a net importer of crude oil owing to falling domestic production, a slowdown in exploration due to low oil prices and rising run rates at its refinery.
Pharmaceuticals & Healthcare
New Zealand Pharmaceuticals & Healthcare
BMI View: New Zealand's updated Health Strategy draft will see limited improvement to the challenging business environment for innovative drugmakers. Cost minimisation continues to be a key aspect of the approach adopted, with the Pharmaceutical Management Agency maintaining its dominant role in curbing pharmaceutical spending. Nonetheless, there will be opportunities for other segments of the health industry, such as telecare, which is poised to play a critical role in enabling New Zealand to achieve its objectives.
Headline Expenditure Forecasts
Pharmaceuticals: NZD1.45bn (USD1.20bn) in 2014 to NZD1.48bn (USD1.04bn) in 2015; 2.0% in local currency terms and -11.4% in US dollar terms. Forecast unchanged from last quarter....
New Zealand Power
BMI View: New Zealand has a well developed domestic energy sector, home to a number of innovative and well-capitalised energy firms. Hydropower leads the energy mix, accounting for over half of domestic capacity and generation, alongside natural-gas fired thermal power plants and a growing non-hydropower renewables sector. The country is phasing out thermal power as it works towards a 90% renewable energy (hydropower and non-hydropower renewables) target by 2025. As such there is some concern relating to energy security if New Zealand fails to install sufficient new capacity before old thermal power plants are taken offline.
New Zealand Renewables
BMI View: As capacity and generation growth of New Zealand's non-hydroelectric renewable sector is forecast to remain subdued in 2016, with rates of 0.11% and 1.87% respectively, new impetus is only expected to come from the retirement of thermal power plants by 2018. Stronger growth in the sector is further undermined by a decreasing energy demand and the lack of a governmental subsidy scheme supporting renewable installations to meet the countries energy and emission targets.
New Zealand Retail
BMI View: New Zealand will see positive, but not spectacular growth in the retail sector in local nominal currency terms as the economy continues to grow at a reasonable pace. However, because of expected weakness for the New Zealand dollar, the sector will contract substantially in US dollar terms. Currency weakness bodes well for tourism and, by extension, the hotel and restaurant sub-sectors. It also means that New Zealand consumers will be less inclined to travel and will instead spend money on consumer goods and services at home.
|Headline Household Spending|
New Zealand Telecommunications
BMI View : Efforts to roll-out wireline and mobile broadband infrastructure and services, including to a large proportion of underserved rural areas, will drive growth of New Zealand's telecoms market in the medium term. This will benefit the service provider sector as new customers are hard to come by and there is little more to be done in upselling premium services. The infrastructure aspect will prove most challenging as consumers will be slow to take full advantage of 3G/4G and fibre networks. Consolidation will continue as operators seek to tap into new markets.
|Mobile Market Saturation Points Provide Opportunities In Multi-Play|
|New Zealand Mobile Market Forecasts|
New Zealand Tourism
BMI View: New Zealand's tourism industry is growing rapidly, supported by extensive government investment in both transport infrastructure and the accommodation sector, and visitor numbers are increasing steadily. A high degree of openness to foreign investment and the expanding inbound and domestic tourism markets are attracting various regional and international hotel developers, and a number of hotel projects are in the pipeline. As a long-haul destination for the vast majority of potential source markets, getting to New Zealand can be prohibitively expensive. Over the longer term, expansion of regional and international air travel connections will be vital to the sustainability of tourism growth.