How did countries like New Zealand recover from the Global Financial crisis?

The facts listed by the previous poster are actually very incorrect. NZ has not recovered from the crisis well, though it was never affected as severely as the US or Europe. The unemployment rate has just gone back UP to 6.8% after dropping to 6.1% for a single quarter. Before that it was at over 7%. This is very high considering unemployment in NZ was the among the lowest in the OECD before the crisis, averaging around 3% for the past decade.



What helped NZ was the fact that our banks were not overexposed to the toxic debt. The NZ government also has a smaller deficit as a percentage of GDP than the US or most of the troubled European countries.



NZ had a small stimulus package, mostly in the form of two rounds of tax cuts across the board in 2008 and 2009 by successive governments. Another round of income tax cuts focussing on the top 10% of earners takes effect on 1 October this year. However this income tax cut is offset by an increase in the Value Added Sales Tax, called GST, from 12.5% to 15%. This is meant to encourage people to save more and be fairer. Most people see it as nothing of the sort as it increases a regressive tax (one that hurts the poor more) to lower a progressive tax (one that hurts the wealthy more). There is also billions being poured into infrastructure including a national ultra-high speed broadband network. Just a couple days ago the government had to announce billions of taxpayer dollars will be used to bail out the investors of our largest investment fund, South Canterbury Finance, which just collapsed. So much for small government.



What also helped NZ is that the housing market didn't collapse here at all. A shortage of available housing has kept prices very high and still increasing 10% a year. The government is actually taking measures to stop house prices from continuing to rise as they are among the highest in the developed world when compared to the median income.



The reforms of the 1980s were indeed a complete rejection of socialism but they did not have very good effects. While something did have to be done, it didn't have to be so quickly and so extremely carried out. NZ's median income shrunk by 40% in 1973 and the country descended into deep recession and stagnation for over a decade. The reforms of the 4th labour govt in the 80s tried to solve this by privatising and cutting services and taxes. Instead NZ sunk into another decade of very high unemployment (around 10%) and an increasing wage gap with Australia.



It took until the end of the 90s for the economy to recover and NZ remains far behind most Western European nations as well as our neighbours Australia. The current government is arguing for less govt, less tax and more privatising as a solution to our 35% lower wages (and getting worse) compared to Aussie. Yet the Australians have more government regulation, higher taxes, compulsory retirement savings etc. So if less govt is better, why are we so much poorer?How did countries like New Zealand recover from the Global Financial crisis?New Zealand has greater economic freedom than the US it is ranked 4th in the world whereas the us is ranked 8th. New Zealand disbanded socialism back in 1986 when it pretty much bankrupted the country and were forced to abandon all subsidies, scale back on regulations and privatize state owned industries to become more efficient Consequently, New Zealand has 4.2% unemployment as the US has 9.6%. Hong Kong the freest since 1954 when the stats first began has 3.5% unemployment. The freer the country the greater the prosperity, More government the greater the poverty.

http://www.heritage.org/index/How did countries like New Zealand recover from the Global Financial crisis?They rejected privatization.How did countries like New Zealand recover from the Global Financial crisis?haha umm john key puts GST up from 12.5% to 15% :(