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
New Zealand Industry Coverage (13)
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 the 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.
Milk production growth to 2018/19: 9.1% to 23.7mn tonnes. Given the small domestic consumption base and the high productivity of the sector, long-term expansion...
New Zealand Autos
New Zealand auto sales continue to power ahead, in line with BMI's optimistic stance towards the local sales market. Looking at sales trends for Q115, a total of 33,276 new vehicles were sold in New Zealand, representing an increase of 7.8% year-on-year (y-o-y), according to figures from New Zealand's Motor Industry Association (MIA).
Breaking down the headline figure, there were a total of 13,503 passengers cars sold (-0.7%), 10,469 SUVs (+14.3%), 7,948 LCVs (+15.7%), 1,134 HCVs (2.4%) and 195 'Other' vehicles (+29.1%). These sales figures are very much in line with BMI's view that CV sales will outstrip PC sales over 2015. Considering the month of March, this was the strongest March for new vehicle sales since 1984 according to the MIA.
For 2015, we are targeting sales growth for the overall new vehicle sales market of 6.6%. CV...
Food & Drink
New Zealand Food & Drink
BMI View: We continue to forecast New Zealand's real GDP growth rate to slow to 2.4% in 2015, from an estimated 3.2% in 2014. A deteriorating outlook for the crucial dairy sector, together with an ongoing decline in construction growth should offset the positive impact of lower oil prices on growth. The agricultural sector has grown in importance over recent years, driven in large part by the dairy sector. The outlook for dairy production in the ongoing 2014/15 season, ending in May, has worsened over recent months. Production of value-added products, including whole milk powder, butter and cheese, will also slow down following strong growth recorded over recent years.
Headline Industry Data (local currency)
Food consumption value growth (y-o-y) in 2015: +5.3%; compound annual growth rate (CAGR) 2014-2019: +5.8%.
New Zealand Infrastructure
BMI View: We expect New Zealand's construction sector to experience a growth slowdown in 2015, due primarily to the limited upside potential for housing demand. The country's property market is highly overvalued and the central bank has put measures in place to make it more difficult for residential developers to borrow, should help to slow property price growth, and could trigger a 10-15% fall over the coming year. This should result in the deceleration of the construction market, but the growth will still remain in positive territory at CAGR 4.9% over the next five years.
Key Trends And Developments
In response to the growing housing market risk due to the rapid increase in Auckland's property prices, the regulator announced two measures on May 13 in an attempt to moderate prices. The first policy is targeted and...
New Zealand Insurance
BMI View: With private expenditure on the rise, the stable New Zealand economy houses an established Insurance market with scope for growth - particularly in the non-life segment. The life insurance segment still remains slow-moving but may still offer opportunity for new and existing players as a result of this low level of penetration and a new surge of interest in KiwiSaver products.
New Zealand's geographical disposition and vulnerability to natural disasters will remain an important component of the non life segment however soaring property prices and high household debt has meant that although property insurance is an integral component to the sector it will experience moderate growth. To balance this slowdown, BMI's steady outlook on...
New Zealand Medical Devices
BMI Industry View: The District Health Boards' focus on cost efficiency and a stronger policy on medical device reimbursement is likely affect the growth prospects of the New Zealand medical device market in 2015 and beyond. The strengthening of the US dollar has already affected import performance from the USA, the country's main supplier, and we expect this trend to continue in the medium term.
Headline Industry Forecasts
The market is expected to post steady, if unspectacular, growth in the next few years. BMI estimates the CAGR for 2013-2018 to be 3.7%. This will take the market to USD1,008.0mn by 2018, equal to USD213 per capita. The orthopaedics &...
Oil & Gas
New Zealand Oil & Gas
BMI View: Production from redevelopment of existing fields will drive a short-term peak in oil and gas production, though over the mid-term decline is inevitable. The country's lack of liquefied natural gas (LNG) infrastructure impedes gas consumption growth, only allowing it to consume as much as it produces. Nevertheless, long-term hydrocarbon potential remains strong with 18 underexplored sedimentary basins outside of the producing Taranaki Basin.
Pharmaceuticals & Healthcare
New Zealand Pharmaceuticals & Healthcare
BMI View : New Zealand will maintain a low-risk and business friendly operating environment, characterised by stable governance and a consistent regulatory agenda. Efforts to increase the uptake of generics and biosimilars will be hampered by the branded drug bias of an aging population who demand access to rising volumes of innovative pharmaceuticals. However, the conversion of these conditions into growth...
New Zealand Renewables
Renewables (including hydro power) make up a dominant share in New Zealand's electricity generation and capacity mix. Significant investment into the renewables industry over the past several years has created a situation of oversupply in the market, which, combined with slowing electricity demand, is expected to hinder further expansion of the renewables sector across our forecast period to 2024.
Key Trends And Developments
In August 2014, New Zealand-based Contact Energy opened its 166 megawatt (MW) Te Mihi geothermal plant in New Zealand. The facility comprises two 83MW steam turbines that were installed close to the 53-year-old Wairakei geothermal plant near the town of Taupo. Once the new plant is complete, some of the units at the old station will be decommissioned.
We believe that the residential solar loan...
New Zealand Retail
BMI View: New Zealand possesses a mature retail market , which continues to benefit from a large proportion of mid to high range income households. We believe that with growing levels disposable income the retail market will see greater spending on non-essential items. New Zealand's retail sales volume registered a 1.7% quarter-on-quarter rise in Q414, with spending motor vehicle and parts retailing leading the way. A sturdy economy is set to support continued growth in spending and retail sales figures throughout our forecast period.
New Zealand's economy currently leads the way throughout the developed world, outperforming both neighbouring Australia and the rest of the OECD with last year's growth reaching a respectable 3.3%. We currently expect GDP...
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 new 3G/4G and fibre networks. Consolidation will continue as operators seek to tap into new markets.
Mobile subscriptions are forecast to rise from 5.855mn in 2014 to 6.324mn by 2019 and a very high penetration rate of 132.5%. Large numbers of inactive accounts are still supported which, at some point in the future, will have...
New Zealand Tourism
BMI View: The New Zealand tourism report looks at a range of key indicators in this developing market, including the expected growth in inbound and outbound travel and the potential for growth in tourism-related expenditure and hotel industry value. Despite its remote location, New Zealand is actively promoting itself on the global tourism stage, and a gradually expanding network of airline connectivity is making the country increasingly accessible for tourists and investors alike.
Australia remains the key source market for tourist visitors to New Zealand - with travel between the two countries benefiting from affordable air travel connections between key cities in both countries. Arrivals from other Asia Pacific countries are increasing rapidly and New Zealand is keen to attract more affluent and high-...