An annual report has ranked New Zealand as the third freest economy out of 180 countries.

The 2019 Index of Economic Freedom, a guide published by Washington think tank The Heritage Foundation, ranks countries across a range of 12 measures, including property rights, business freedom and trade freedom.

With an overall score of 84.4 out of 100, New Zealand was third behind Hong Kong (90.2) and Singapore (89.4).

Switzerland (81.9), Australia (80.9) and Ireland (80.5) followed New Zealand in the rundown.

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New Zealand's performance across categories. Image/Index for Economic Freedom.
New Zealand's performance across categories. Image/Index for Economic Freedom.

On the opposite end of the table, were Cuba (27.8), Venezuela (25.9) and North Korea (5.9), which all rated as restrictive places to do business.

The result this year was on par with 2018, when New Zealand earned a score of 84.2. Across the history of the report, New Zealand has steadily progressed, increasing its freedom level from 78.1 in 1996 to its current level.

Our island nation managed to improve or retain its rating in eight of 12 the categories included in the report.

New Zealand's overall score has increased by 0.2 points, with higher scores for trade freedom and labour freedom narrowly exceeding declines in judicial effectiveness and monetary freedom.

The report noted that the policies of the new Government have had a direct impact on the business community since taking over.

"The new government shook business confidence in 2018 with plans for a higher minimum wage, union-friendly labour code reforms, fewer immigrant visas, a ban on housing purchases by foreigners, and higher taxes," the report said.

More recently, there have been signs of business confidence showing signs of recovery.

Figures from the New Zealand Institute of Economic Research showed that business confidence improved in the December quarter, although it remained relatively pessimistic when compared to previous years.

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The issue of strike action was also raised, with the report saying that a series of settlements after public-sector strikes will likely push wage demands higher in the private sector.

Despite these challenges, the report continued by saying that the rule of law is well maintained and that the judiciary is generally independent in New Zealand.

North Korea was rated as the most economically restrictive country in the world. Photo/Getty Images.
North Korea was rated as the most economically restrictive country in the world. Photo/Getty Images.

It was also notable that New Zealand's property freedom rights have dropped from 96.1 in 2016 to 95 in the latest report.

While only a moderate drop, this coincides with New Zealand's tightened restrictions on housing purchases by foreign nationals.

The move has faced criticism due to the impact the changes may have in investment in the local market.

Analysis from Westpac showed Auckland house sales slumped 20 per cent year on year off the back of the ban on foreign buyers coming into effect.

It's yet to be seen whether this downturn will have a lasting effect or whether it will spread to have a broader impact on New Zealand business.

The top 10

1 Hong Kong
2 Singapore
3 New Zealand
4 Switzerland
5 Australia
6 Ireland
7 Britain
8 Canada
9 United Arab Emirates
10 Taiwan