The impact of sagging dairy prices and the economic slowdown in China is apparent in New Zealand's latest monthly merchandise trade figures, which show a bigger than expected deficit of $1.1 billion.
A deficit was expected for July, but this is larger than economists were forecasting.
According to Stats NZ the latest gap between the value of goods we exported and the goods we imported gave us 12-month running deficit of $15.8 billion. That's large, but it is actually down on the record 12 month deficit that was hit in May this year of $17.1 billion. It is, however, up on the $12 billion deficit at the same time a year ago.
Stats NZ describes the overseas merchandise trade statistics as providing information on imports and exports of merchandise goods between New Zealand and other countries, while the balance of payments figures (including the current account) record the total value of all the country's transactions with the rest of the world.
The most recent figures showed that our current account deficit dropped in March to $33 billion, which meant that it was now 8.5% of GDP, down from 9% in December. That's still very high and will be being watched by the international credit rating agencies.
But back to the latest merchandise trade figures, Stats NZ said that in July goods exports fell $890 million (14%), to $5.5 billion while goods imports fell $1.2 billion (16%), to $6.6 billion, giving the monthly trade deficit of $1.1 billion. The figures are rounded.
In terms of the detail in the export figures when compared with the same month a year ago, milk powder, butter, and cheese (our largest export commodity group) fell by $350 million (19%), to $1.5 billion. Also notable was that meat and edible offal exports fell by $194 million (21%) to $712 million.
Compared with the same month a year ago our total exports to China were down some $407 million (24%). Notable falls in that were: meat and edible offal, down $176 million; preparations of milk, cereals, flour, and starch, down $96 million; milk powder, butter, and cheese, down $64 million.
31 Comments
Selling houses to foreigners will boost our capital account for the time being. However, our current account balance will significantly worsen once rents and/or capital gains from house flipping start flowing out of the country to those overseas investors.
Relaxing bright-line test and interest deductibility will only boost those returns for foreigners.
Luxon's fiscal policy narrative is to pay down debt owed to foreigners and instead pawn off state assets to them. Investors expect higher ROI on commercial investments as compared to low-risk yields on sovereign bonds. In other words, more critical assets falling into the hands of foreigners for no real benefit to NZ and we incur bigger current account deficits.
Yes, cars are a fool errand (especially in the context of NZ use..one person per vehicle commute and the cost).
But biking is better
Publics transport is better
Walking is better.
Designing cities where we don't need to commute like we do is better
Are these woke?
I await your cleverness.
I'm not saying it’s woke, it's just stupid. You don't want to be trading your already (lower) carbon dairy exports with buying EVs to reduce your low emissions to Zero while the US and Europe are still burning coal, and the commodity producers like Australia, Africa and LATAM still producing Lithium by burning coal and diesel.
Widening trade deficit despite record-high inflation and immigration. What’s the point of immigration if we cannot produce more of what the world wants
The reality is that we are importing immigrants just to sustain a normal Kiwi lifestyle. It is all to do with our low productivity which is lowest in the OECD. It’s a huge problem and I can only hope that AI will help us improve it otherwise, the cultural issues that are holding our productivity down are just too hard to fix
i suppose i just remember Labour bankrupting the country a couple fo times and leaving massive structural deficit and National spending 6 years fixing it - sure tax cuts will add -- but then getting rid of all teh wasteful spending will subtract -- and with Act -- loosing some of the massive extra government jobs that have delivered bugger all will help !
National will cut spending on core public services. Only this time, those core services are already under immense pressure from over a strained infrastructure, high migration and net brain drain. Any cuts to critical spending might tip our health/education system into collapse.
I'd be quite happy to see NZ's dollar fall further.
Seeing the price of all the unnecessary imported goods rise would see the people who haven't been affected by high interest rates think twice about further lavish purchases. Perhaps not great for inflation prospects in the short term but good for the average kiwi poser in the longer term.
(discl: My main mobile phone is an iPhone 5s and I'm typing this on a 14 year laptop bought for $450 way back then and up until recently my drive was a 1999 Toyota Vitz. They all work/ed just fine. I'm clearly missing the poser gene.)
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