When I met with UK Foreign Secretary Boris Johnson a few weeks ago, one of the things he wanted to talk about was how New Zealand had managed to bounce back so strongly after the Global Financial Crisis.
He was genuinely impressed with our country’s fiscal management and the ability of this government to see the longer-term, bigger picture and allow the market to play out without excessive central government regulation.
We may be a small, geographically isolated country but we’ve been able to buck some of the global economic trends that many other nations have struggled with.
Three months ago, Finance Minister Steven Joyce delivered the National Government’s ninth Budget.
He was able to present significant investments in public services and infrastructure as well as a $2 billion a year Family Incomes Package that will make a tangible difference to New Zealand families.
Our economy is performing well and that’s a tribute to the hard work of New Zealanders.
We have experienced positive growth in all but one quarter over the last six years.
Being prudent, growing open trade negotiations and enabling businesses to be more innovative has paid off.
We’ve had a strong economic plan and now confident companies are investing, exporting and creating new skilled jobs
The Treasury is forecasting real GDP growth of 3.1 per cent on average for the next five years.
Global economic growth is projected by the World Bank to reach 2.7 per cent this year – up from 2.4 per cent in 2016 – and this has been supported by a recovery in manufacturing activity and commodity prices.
For most of the post WWII period, there had been a 2:1 trade to global GDP growth ratio. Following the global financial crisis this ratio evened up.
Global goods trade growth picked up pace in the second half of 2016 and has remained strong in 2017, supported by expanding manufacturing activity.
Global trade growth is expected to reach 4 per cent this year.
Underlying this, United States import growth is forecast to reach 6.2 per cent in 2017, while export growth from China is expected to rise by 3 per cent.
Despite our size, New Zealand is viewed as a leader in free trade and we back ourselves to negotiate large-scale agreements that provide our exporters, importers and regional economies with tangible benefits.
Earlier this year, the Prime Minister announced the Trade Agenda 2030 – an ambitious plan that aims to have free trade agreement cover 90 per cent of New Zealand’s goods exports by 2030 – up from about 53 per cent at the moment.
To accomplish this means far more than sending our trade officials around the world.
It means forging meaningful relationships and maintaining the high standards we are known for.
The Trade Agenda package includes:A new embassy in Dublin, Ireland and a new High Commission in Sri Lanka –these posts will support our trading relationship with the EU after Brexit and broaden our economic relationship with Sri Lanka; $35.3 million to the Ministry of Primary Industries to focus on boosting the value of our primary sector exports; $20 million for the Ministry of Foreign Affairs and Trade to focus on improving market access, maximising benefits from existing FTAs and negotiating new ones, helping businesses internationalise and tackling non-tariff barriers; $6.7 million to strengthen our international networks across the globe and boost the availability of consular services for Kiwis overseas; The establishment of a Ministerial Advisory Group to ensure the public is better informed on trade issues; The development of a single point of contact to allow exporters to alert the Government to non-tariff barriers and to get better information and support.
As a Government, we’re working hard to help create opportunities for our exporters to compete successfully on the world stage.
And we are incredibly proud to see New Zealanders succeed internationally.
There is so much to gain from advances in free trade, including jobs and higher incomes for New Zealanders and it’s important that we take advantage of these global trends while we can.
The latest data suggests that improving global conditions are directly benefiting New Zealand traders.
New Zealand goods exports to China – our leading goods market – gained momentum in the last quarter, increasing 14 per cent to the year ending June 2017.
Goods exports to Australia, the US, Japan and Korea are all up in the last quarter and prices are generally increasing in the Global Dairy Trade auction with seven of the last ten auctions resulting in rising prices.
There are many positives that can be highlighted but, of course, there are still risks to global stability.
These include potential for countries to increase trade protection policies and financial sector variabilities, including mounting financial stability risks in China, political tensions and some very real security issues.
In the last few weeks, I’ve attended meetings in Indonesia and the Philippines that have focused on counter-terrorism, cross-border conflict, cyber security and other issues important to the Asia Pacific region, like the South China Sea and Korean peninsula.
It’s very clear that all countries in that region except North Korea have no interest in any kind of conflict that would halt or redirect their economic growth.
With China, Russia, the US and Japan along with all ASEAN countries calling for dialogue and dampening of tensions. For each of them and for us, the trade agenda remains important.
While a lot of the international rhetoric may be about protectionism and the view that some major players are turning inwards, we now have a more interconnected world marketplace than ever before and the introduction of new measures appears to be slowing.
The latest World Trade Organisation monitoring report shows members introduced fewer trade restrictive measures in 2016 compared to 2015, when new measures averaged about 20 a month.
Since I assumed the Foreign Affairs portfolio about three months ago, we’ve launched free trade negotiations with the Pacific Alliance, of which Mexico, Chile, Colombia and Peru are members.
These four nations are home to 221 million consumers and have a combined GDP of US3.8 trillion.
The PACER Plus agreement has been signed to provide social and economic benefits to many Pacific nations.
The $55 million development package will also help cut red tape for New Zealand businesses and will establish a common set of trading rules.
Thailand and New Zealand have agreed to market access improvements for our exporters, we’ve started high-level talks with Washington under the Trump administration and we’ve solidified our position high up the queue for a post-Brexit FTA with the UK.
Earlier this year we signed the Trans-Pacific Partnership 11, and officials will be assessing the options to bring TPP11 into force.
TPP11 will ensure our exporters remain competitive in important markets and will support jobs in all regions of New Zealand.
In three years’ time, New Zealand will be able to showcase its innovative products and services on the world stage at Dubai 2020 – a world expo that will likely attract 25 million visitors from across Europe, the Middle East, North Africa and Asia.
In short, the outlook for New Zealand exporters is bright and, as we all know, a strong export economy produces positive knock-on effects for every single New Zealander.
I hope many of you in this room share the confidence I have in our country and continue to work towards an even more prosperous future for New Zealand.