New Zealand is now one of the most attractive countries in the world for supporting and enabling dynamic business growth, having risen from 13th in 2012 to fourth in the latest Grant Thornton Global Dynamism Index (GDI) 2013.

Developed in conjunction with the Economist Intelligence Unit, the GDI ranks 60 of the world's largest economies on dynamism, which indicates changes in an economy that are likely to lead to a faster future rate of growth.

Greg Thompson, partner at Grant Thornton New Zealand, said the index shows that New Zealand has a great platform from which businesses can grow.

“But that is only part of the story. The key is turning potential into reality and actually seeing our businesses grow and prosper with resultant GDP growth,” he said.

The survey ranked countries on 22 indicators of dynamism across five categories including business operating environment, science and technology, labour and human capital, financing environment and economics and growth. Australia was ranked top on 66.5, Chile 64.5, China 62.7 and New Zealand 62.6.

“This really is good news for New Zealand. While the survey shows that we have excellent building blocks in place for future growth, there are also other factors that are in our favour. Our business confidence levels are high and our export markets are strong. When you look at Australia, yes, they might be ranked No.1, but with business confidence on the decline, a struggling mining sector and the shadow of an election, their position is not as rosy as it might seem,” he said.

New Zealand was ranked 8th in the financing environment category, 9th in labour and human capital and 11th in the business operating environment category.

“While we were ranked lower in the economics and growth and science and technology categories (22nd and 23rd respectively) our dynamism index in both has improved since last year,” said Thompson.

“Our archiles heel continues to be low levels of investment in R&D and IT. We are ranked 27th for our R&D spend, well behind sector leaders South Korea, Israel, Finland and  Sweden, and 20th in the growth in broadband subscriber lines. In IT spending growth we are ranked 17th,” he said.

 “The survey identified our lack of investment in research as a percentage of GDP as a long standing problem area. We are a country that prefers to throw people at a problem rather than investing in technology and R&D to test smarter ways of doing business. We are weak in providing on-going education to our workforce. For many, they stop learning once they leave school or a tertiary institution. Education needs to be a life-long journey, not one that stops in a person’s teens or early 20s.

“With a low percentage of our population under 30 years, the increasing burden on our taxpayers as more people draw superannuation and come to rely more heavily on our health system will impact our ability to grow our economy,” he said.

The areas noted in the index where New Zealand was strong included:

• Foreign trade and exchange regimes and controls
• Policy towards private enterprise and competition
• Political stability
• Legal and regulatory risk
• Broadband subscriber lines per 100 inhabitants
• Unemployment
• School life expectancy
• Quality of overall financial regulatory system
• Access of firms to medium-term capital
• Corporate tax burden

The index also showed that China was the big mover in the index, up to No.3 spot compared with 20th a year ago.

“Growth in China is slowing as the new leadership rebalances the economy away from exports and investment towards a more sustainable, consumption-driven model of growth. However, the positive news is  that this is not dampening business expansion prospects. The GDI shows increasing science and technology activity, which will help sustain economic growth potential by boosting the quality, productivity and efficiency of outputs.

“China is not only a massive market, but it is also developing fast. By contrast, the other BRIC economies are not looking as flash. Brazil slid 11 places to rank 42; Russia fell three places to rank 43; and India dropped six places to 48. Of those that topped the index last year, Singapore was the big loser dropping from 1st to 7th, Finland dropped from 2nd to 5th equal, Sweden 3rd to 9th and Israel 4th to 8th.”         

For  further information please contact:

Greg Thompson
Partner, Tax and Privately Held Business
D +64 4 495 3775
T +64 4 474  8500
E greg.thompson@nz.gt.com