PESTEL analysis of New Zealand
This is a detailed PESTEL analysis of New Zealand. It aims to explore some of the political, economic, social, technological, environmental, and legal factors affecting New Zealand today. New Zealand is one of the best countries in the world. It is made up of two main islands and approximately 600 smaller islands.
Political factors that affect New Zealand
New Zealand is a parliamentary democracy. It is also a constitutional monarchy. Elizabeth II, the Queen of the United Kingdom and the other Commonwealth realms, is the Queen of New Zealand and the head of state. The Governor-General of the country represents the Queen whom Her Majesty appoints on the recommendations of the Prime Minister of the country (Government House, 2019).
According to the 2019 Lowy Institute’s Asia-Power Index, New Zealand is one of the ‘middle power’ countries in the world. The Asia-Power Index considers eight thematic measures of power i.e. economic resources, military capability, resilience, future resources, diplomatic influence, economic relationships, defence networks and cultural influence, to determine the ranking of the top 25 powerful countries in the world (Lowy Institute, 2019).
New Zealand is a small, stable, and peaceful country. The corruption rate in the country is low as well. However, the terrorist attacks on Muslim places of worship in March 2019 have shocked the nation. In addition, some analysts argue that some foreign elements have sought to influence the domestic politics of the country. Consequently, many politicians are discussing how new laws can be introduced to curb foreign influence (Smyth, 2019).
Economic factors that affect New Zealand
New Zealand is a developed and wealthy nation. Agriculture is the largest industry in the country. Other industries that drive the economy are horticulture, forestry, tourism, fishing, and mining. Construction, food & beverage, and retail industries are also booming in the country. The total GDP in 2017 was $205.9 billion (World Bank, 2017).
New Zealand exported $39.8 billion worth of goods around the world in 2018 (Workman, 2019). Dairy, meat, wood, fruits, drinks, fish, machinery, and aluminium are some of the main export items. Australia, the USA, Japan, and China are the top four export destinations. New Zealand also imports a lot of things mostly from Australia, China, the USA, Japan, Singapore, Malaysia, and Germany. Sweetened milk, sheep meat, butter, frozen beef, cheese, and wine are some of the popular items of import.
New Zealand is a strong advocate of free trade. Some analysts argue that the country has a mixed economy and is driven by free market principles. Unemployment rates had ups and downs in the recent years. While tax is a complex issue in many developed and developing economies, New Zealand has come up with a relatively simple tax system. Top personal tax rate is 33% for anyone earning over $70,000 (New Zealand Dollar), while 10.5% for an income up to $14,000. Companies and corporates are taxed at a flat rate of 28% (NZ, 2019).
Social factors that affect New Zealand
Social environment is the next element to address in the PESTEL analysis of New Zealand. The total population of New Zealand is 4.7 million as of March 2019 (BBC, 2019). English and Maori are the major languages, and Christianity is the major religion; however, there is no official religion in the country. The life expectancy for men is 80 years, while 88 years for women.
New Zealand is a culturally diverse nation, and according to a research conducted by The Centre for Applied Cross-Cultural Research’s (CACR) in 2012, 89% of New Zealanders agree that it is a good thing for a society to be made up of people from different races, religions and cultures (Victoria University of Wellington, 2019).
New Zealand is one of the best countries in world. Its performance in areas such as employment, social support, air quality, and life satisfaction is very good (OECD, 2019). New Zealanders are very much into the world of Internet. Almost half a million people visit food websites each month, and youngsters watch many hours of videos online every day. New Zealanders love sports and the country is one of the best in the world in many sports such as cricket, field hockey, rugby, and netball.
However, there are some social challenges facing New Zealand today. For instance, improvements need to be made in earnings and household income, housing affordability and the incidence of long working hours (OECD, 2019). Crime, problems in social welfare, youth issues, and the gap between the rich and the poor are also affecting New Zealand today.
Technological factors that affect New Zealand
New Zealand has a diverse and advanced tech sector. The sector is rapidly growing and requires more people to come into the industry. IT jobs including but not limited to software engineering and development, project management, marketing and business analysis, software and applications programming, and IT security are very much in demand. Many of New Zealand’s ICT companies have earned an international standing for innovation and creativity.
Tech sector employs approximately 140,000 people with a good percentage of women representation (23%). It contributes to the national economy immensely, and the government of New Zealand aims to make it the second-largest contributor by 2025 (AingeRoy, 2018). To drive the IT sector, New Zealand needs both local and international talents. However, unlike many other tech hubs in the world, New Zealand is not seen a sought after destination for many global tech talents. This is an area that the government of New Zealand needs to address effectively.
Environmental factors that affect New Zealand
New Zealand is one of the top holiday destinations in the world. Jagged glacial mountains, lakes, sandy beaches, bungee jumping, sky diving, biking, hiking, kayaking, rich marine life are some of the attractions and activities that captivate tourists. No wonder why Peter Jackson filmed his epic trilogies, Lord of the Rings and The Hobbit in his home country, New Zealand.
New Zealand’s climate is very good for agriculture. It has consistent annual rainfall, and does not suffer from long periods of drought. However, many New Zealanders are concerned about some environmental challenges such as habitat loss, species decline, air pollution primarily from cars, deforestation, soil health, and soil erosion.
Legal factors that affect New Zealand
The last element to discuss in the PESTEL analysis of New Zealand is the legal environment. Due to a limited scope, this article touches on some legal issues briefly. New Zealand is one of the least corrupt nations in the world. It generally welcomes foreign direct investment.
New Zealand ranked No1 (out of 190 nations) in the World Bank’s ‘Ease of doing business’ in 2018. It has a strong and independent justice system that is highly respected worldwide. Employers must not pay any adult employees less than the minimum wage set by the government which is $17.70 (New Zealand Dollar) per hour as of April 2019.
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Last update: 04 July 2019
AingeRoy, E. (2018) ‘New Zealand wants you’: the problem with tech at the edge of the world, available at: https://www.theguardian.com/world/2018/jun/25/new-zealand-wants-you-the-problem-with-tech-at-the-edge-of-the-world (accessed 04 July 2019)
Government House (2019) The Office of the Governor-General, available at: https://gg.govt.nz/office-governor-general (accessed 03 July 2019)
Lowy Institute (2019) Five big takeaways from the 2019 Asia Power Index, available at: https://www.lowyinstitute.org/the-interpreter/power-shifts-fevered-times-2019-asia-power-index (accessed 01 July 2019)
NZ (2019) Taxes, available at: https://www.newzealandnow.govt.nz/living-in-nz/money-tax/nz-tax-system, (accessed 04 July 2019)
OECD (2019) OECD Economic Surveys New Zealand, available at: http://www.oecd.org/eco/surveys/new-zealand-2019-OECD-economic-survey-overview.pdf (accessed 02 July 2019)
Smyth, J. (2019) New Zealand plans laws to curb foreign influence in politics, available at: https://www.ft.com/content/a3250558-3efb-11e9-b896-fe36ec32aece (accessed 03 July 2019)
Victoria University of Wellington (2019) New Zealanders value a strong multicultural society, available at: https://www.victoria.ac.nz/cacr/about/diversity-issues/corruption-drops-as-incomes-rise-say-victoria-researchers (accessed 30 June 2019)
Workman, D. (2019) New Zealand’s Top 10 Exports, available at: http://www.worldstopexports.com/new-zealands-top-10-exports/ (accessed 29 June 2019)
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Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of Leeds Metropolitan University and London South Bank University.