Tourism cleans up

Chris Pritchard

New Zealand has long capitalised on its clean-and-green image. But last year, it drew in an estimated 2.6 million visitors, making tourism the country’s leading export earner – overtaking the dairy industry for the first time.

New Zealand is commonly commended for “punching above its weight” – a description often heard inside as well as outside the bor­ders of this South Pacific island nation of only 4.4 million people. Against-the-odds successes in diverse fields encompassing science, education, the arts and sport often prompt jocular suggestions that there must be something in the water.

Whatever the reason, the country feels good about itself and certainly isn’t low on self-esteem. Take the economy, for in­stance. New Zealanders routinely say skil­ful fiscal management ensured their coun­try was less battered than many others by the global financial crisis (though more so than Australia, its near neighbour and main trading partner, which was cushioned by mining exports).

Still, a new edginess about the economy is apparent. This can be felt in the capital, Wellington, and the business hub, Auck­land. It’s similarly evident in the two main South Island cities, tourism-dependent Dunedin and Christchurch, which is recov­ering from 2011’s devastating earthquake. Analysts aren’t forecasting recession, merely a slightly rockier ride. Nonetheless, New Zealand’s mood is by no means one of doom and gloom. While Air New Zealand announced in February that it will cut 440 jobs after a profit slump, economic observ­ers quickly pointed out this downturn has more to do with the aviation sector than with New Zealand. Like other carriers, the well-regarded airline blames Europe’s woes and high fuel prices.

In 2011, tourism became the country’s leading export industry, ousting dairy-re­lated activities (milk, butter, cheese) partly because drought blighted key areas. How­ever, tourist industry leaders highlight the positive impact of one of the world’s most effective marketing slogans, capitalising on the country’s clean-and-green image: “100% Pure”.

According to New Zealand’s Aviation, Tourism and Travel Training Organisation, tourism contributes close to 10 percent of New Zealand’s GDP and employs – directly and indirectly – almost one in ten working New Zealanders. Tourism employees are mostly well paid, a fact recognised by the Organisation for Economic Co-operation and Development (OECD), which ranks New Zealand among “high income” countries.

A total of 2.6 million tourists visited New Zealand in 2011, up 3 percent from the pre­vious year. What’s more, they spent 3.3 per­cent more than 2010’s visitors. The top five markets are Australia (where even weekend trips are promoted and trans-Tasman fares are kept low by fierce competition among a multiplicity of carriers), Britain, the United States, China and Japan. Korea and India, though smaller markets, are among the fast­est growing.

A decline in numbers of British (and other European) visitors, as well as North Ameri­can arrivals, is attributed to these coun­tries’ own economic troubles and regarded as yet another indicator that New Zealand isn’t immune from outside woes. It’s also seen as justification for heavy promotional concentration on the growing Chinese and Australian markets. Inbound tourism from China is expected to increase rapidly.

New Zealand’s other major exports are driven by agriculture (which, aside from dairy, includes wool, lamb, beef, wine, fruit and vegetables), fishing and machinery manufacture, as well as education. Foreign student numbers are growing, not just at universities but also at high schools, with Asia being the main market. Last year, 93,500 foreign students were enrolled at New Zealand’s schools, colleges and uni­versities with parents reportedly keen on a stricter, safer environment than in neigh­bouring Australia, a competitor.

Petroleum, machinery, vehicles, plastics and textiles are also key imports. Leading trading partners are Australia, China, the United States and Japan with New Zealand poised for a major campaign to boost Chi­nese trade.

The International Monetary Fund pre­dicts real GDP growth of 3.8 percent this year, with consumer prices rising by an av­erage of 2.7 percent. The New Zealand dol­lar has, of late, been trending higher against a weakening US dollar (it’s currently worth US$0.84).

New Zealand banks remain cautiously upbeat, while warning that overseas events will inevitably impinge on New Zealand’s performance. However, an overview by the National Bank of New Zealand maintains that “global recession in 2012 is not our core view”. It expects “New Zealand’s ex­port commodity prices to remain elevated”. The bank forecasts reduced unemployment and a strengthened New Zealand dollar as the year progresses, and ends its overview with high hopes: “Our expectation is that the New Zealand economy is set to outgrow a lot of other developed economies.”

Competitor Westpac Banking Corpora­tion predicts a resurgence of spending, cit­ing raised consumer confidence. But what of a worryingly flat housing market? West­pac suggests it’s merely a “breather” to be followed by a rebound. The bank also re­ports that retail sales rose by 2.9 percent in the quarter ended 31 December 2011, the highest three-month rise since Westpac sur­veys began in 1995.

Overall, “the economic outlook is somewhat weaker than forecast,” Finance Minister Bill English acknowledges. “But it remains positive.” On the downside, he re­fers to a “deteriorating situation in Europe”.

Two credit ratings agencies downgrad­ed New Zealand marginally last year, but Prime Minister John Key notes that New Zealand is merely one of many countries downgraded because of global econom­ic conditions and that its rating remains strong. Looking back, his optimism seems justified, the economy is ticking over quite well. “Our books are in good shape,” adds Key.

New Zealand is often cited as a success­ful example of multiculturalism. Its multi-ethnic population is 68 percent of Euro­pean origin, 15 percent indigenous Maori, 7 percent South Pacific islander (mostly Polynesian, like Maoris), 9 percent Asian, and the rest from Africa, the Middle East and the Americas. The country acts as a safety valve for small island nations, whose citizens are a major source of immigrants. New Zealanders’ main emigration destina­tion is Australia, which is home to about 500,000 New Zealand citizens.

New Zealanders sometimes condemn this ‘brain drain’ to Australia, which has existed since colonial times. However, the attraction of Australia has been less when­ever the New Zealand economy has been strong. And, according to some analysts, New Zealand is again ready for a period of economic strength – this time because of tourists rather than cows.

About the author:

Sydney-based journalist Chris Pritchard often visits New Zealand and closely monitors New Zealand affairs


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