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Economic Impact Assessment of the New Zealand-India Free Trade Agreement

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Abstract

The New Zealand-India Free Trade Agreement officially entered into force on 20 October 2026. This study estimates what it means for the New Zealand economy. Using a model of global production, consumption and trade, we compare two scenarios: one with the agreement and one without. We assume the agreement is legally binding from 1 January 2027 and simulate the global economy out to 2050. The gains are modest and grow over time. New Zealand GDP is $135.0 million higher in 2027 and $657.7 million higher in 2050. That is 0.03% and 0.10% of baseline GDP respectively. Exports to India rise by 25.0% by 2050, led by forestry and wood products, meat and horticulture. Real wages rise for all workers, with the largest gains for production workers. Tariff cuts drive most of the early gains. Non-tariff measures and trade facilitation matter more later. Employment shifts from industrial to agricultural sectors are small and will likely be absorbed by retirements. The model may understate the upside. New trade networks in products with little existing trade could deliver larger gains than we can capture here.

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  • Niven Winchester, "undated". "Economic Impact Assessment of the New Zealand-India Free Trade Agreement," Motu Working Papers 26_09, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:26_09
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