The most sustained boom in New Zealand’s economic history began with the recovery from the great depression in 1935, and very strong production during the Second World War, as people worked long hours and women worked outside the home as a part of the war effort.
Growth slowed during the period of post-war adjustment. Strong growth took up again from 1950 to 1966. Inflation was often the greatest worry, although there always had been a tendency for the economy to demand more imports than it could pay for from exports. This was a major reason for government encouragement of import-competing industrialisation – even so there was some borrowing.
The boom was sustained by favourable prices (high terms of trade) for pastoral exports, while manufacturing absorbed a growing labour force. Unemployment was very low, and there was much personal investment in new homes, and in consumer goods such as whiteware.
The New Zealand economy remained largely a ‘monoculture’, exporting (almost only) ‘processed grass’ – meat, wool and dairy products – mainly to the British market.
There were isolated local resource-based or quarry booms. The hydrocarbon resources found around Taranaki from 1958, and especially the giant Māui gas field found in 1968, lifted that region’s economic activity. The Chatham Islands had a short boom in the 1960s when crayfish were fished intensively.
End of the wool economy
At the end of 1966 the auction price of cross-bred wool fell dramatically by around 40% – only ever to recover for a brief period during the 1971–72 commodity boom – as synthetic fibre replaced wool. Fine wools from Merinos were still profitable, but while wool was once New Zealand’s number one export, in 2008 it was under 2% of New Zealand’s exports by value. The entire sheep industry was undermined, and farmers sought to diversify – as did the whole economy.