Chinese think tank, the Institute of World Economics and Politics, ranked New Zealand as the second safest place to invest, second only to Germany.
This is only the fourth time the think tank has researched world economies safe for Chinese investments. Operating under the auspices of the Chinese Academy of Social Sciences, rankings are compiled on a number of factors, of which New Zealand scored well in all.
Germany held first position for the second year running as did the country ranked in last position. They were the same both years. However, many economists question why New Zealand isn’t trading up to their full potential, having been scored so highly by this esteemed body of research economists. The answer is both simple and complex.
The Complexity of New Zealand’s Leading Global Trade Partners
New Zealand is ranked a safe place for foreign investments due to a number of key factors such as a welcoming political system, high levels of transparency, a wide absence of tariffs on trade and an economy that has become globally competitive in recent decades. However, there are factors that can dissuade investors seeking a solid safety net. One of the key issues is the economic stability of some of New Zealand’s main trading partners that include:
- Hong Kong
All of which are widely recognized in the global FOREX market as majors and minors in currency trading. This means they have fairly strong economies, but some have been declining within recent years. China, although a key major player on the global market, is one example of an economy that has been on a downhill fall for the past few years. Once a strong currency to contend with, China has issues at home that need to be ironed out. Chile’s economy is also declining. These declining economies may have a negative impact on the economy of New Zealand, and this is one very good reason why the nation isn’t faring as well as it could in the area of global investments in New Zealand markets.
How a Trade Partner’s Economy Impacts Investments in New Zealand
When you stop to consider that a huge factor in growing an economy is that nation’s GDP, anything that could impact imports and exports will obviously be an issue. With China losing ground exporting goods and the new administration in the United States threatening to reduce imports from that nation in order to grow the American economy through accelerated job growth, there is concern that the Chinese economy will decline even further. To put it simply, if China as the leading foreign investor in New Zealand hits a rocky road, this country could potentially reduce their investments.
Who Hit the Pause Button?
The long and the short of it is in how New Zealand’s largest Free Trade Agreement partners fare. If their trade partners continue economic growth, then New Zealand will fare well. If not, investments in New Zealand may begin to devalue due to a drastically reduced amount of exports. New Zealand isn’t living up to its potential economically because trade partners are wary of continued investments at this time. As economies normalize around the globe, New Zealand will begin its upward economic movement once again.
Think of it as pushing the ‘Pause’ button on your remote. New Zealand isn’t doing poorly but the country isn’t living up to its potential at this time. When world economies straighten themselves out, New Zealand is primed for rapid growth. The bottom line – it’s a waiting game and the country with the greatest amount of patience and perseverance will be the ultimate victor. That would be New Zealand.