Surging imports and higher prices push NZ to record trade deficit

Business / news

Statistics NZ says September was the third record month in a row for imports, with the figure reaching $6.6 billion - up 30% on the same month a year ago

27th Oct 21, 11:20am by David Hargreaves

A third successive month of record imports has pushed New Zealand to a record trade deficit.

Statistics New Zealand said September imports - at $6.6 billion - outstripped exports ($4.4 billion) by some $2.2 billion. A record.

The import figure was up some $1.5 billion (30%) on the same month a year ago.

The exports figure was $387 million higher than a year ago.

The annual trade balance for the year ended September 2021 was a deficit of $4.1 billion.

"These three consecutive record months for imports are a reflection of both the higher prices New Zealanders are paying for consumer goods, and strong demand for capital goods such as machinery used in construction, and passenger vehicles," Stats NZ's international trade manager Alasdair Allen said.

The largest contributor to the rise in imports was again vehicles, parts, and accessories, up $269 million (43%) compared with a year ago to $895 million.

Stats NZ said September 2021 also saw the highest monthly value of imports of electric vehicles to date, at $53 million. Imports of electric vehicles accounted for 6.0% of all passenger vehicle imports in the year ended September 2021, whereas they made up just 2.0% in the year ended September 2018.

Other significant rises in imports were in mechanical machinery and equipment (up $192 million), and electrical machinery and equipment (up $131 million), with its top contributor being mobile phones (up $60 million).

On the exports side, dairy products have been a star. Giant dairy co-operative Fonterra on Tuesday raised its forecast payout to farmers for the current season to an implied record-equalling $8.40 per kilogram of milk solids up from $8 previously.

Exports of milk powder, butter, and cheese were up $128 million (17%) in September, reaching $904 million. The largest contributor to this rise was milk powder, up $64 million.

"We've seen a strong start to the export season for milk powder, butter, and cheese, this month having the highest value for exports for any September month since 2013," Allen said.

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21 Comments

by gypsymanz | 27th Oct 21, 11:56am 1635288991

Jacinda keeps saying we are a small trading nation, the above seems to suggest we suck at it.

by Roelof | 27th Oct 21, 3:39pm 1635302359

Some keep saying that NZ is chronic debtor nation, that is slowly selling its silverware to maintain a lifestyle that maybe it thinks its entitled to.....

by Audaxes | 27th Oct 21, 3:57pm 1635303470

Is this why our banks borrow foreign currency amounting to ~20% of all NZ domestic lending? Xccy basis swap hedged with Supranational NZD bond issuance monetised by excess NZD FX sales used to purchase foreign currency priced offshore goods.

by Chris-M | 27th Oct 21, 4:23pm 1635304992

Don't worry they will be able to sell our water assets soon, when they have got their hands on it. Either that or the Chinese will take possession of them when we inevitably default on the $180 billion loan. A classic banana republic move.

It will be interesting to see if the odd billion or two fall off the table and "disappear".

by company of heroes | 27th Oct 21, 1:23pm 1635294184

Not surprised, our housing market had a 30% gain last year along that made us become fourth richest in the world. Thanks to our RBNZ's printed money. You wonder why everything is expensive now...

by fortunr | 28th Oct 21, 10:34am 1635370497

Well, this is what tends to happen when successive governments and the RBNZ only pay attention to the housing Ponzi and not to the real economy. Rather than a productive, exporting nation we risk becoming a giant housing Ponzi supporting a minority of parasitic, unproductive housing specuvestors.

by redcows1 | 27th Oct 21, 1:28pm 1635294525

I thought there was supply chain blockage? Looks to me like we're just importing more. Though I do not the stats are value not volume.

$60m extra phones.

by AKLCrusader | 28th Oct 21, 8:15am 1635362127

My freight costs on imports used to be $600k per month, now $2.4m per month.

We're importing the same amount, but spending 4 times the cost. It does not take much for the dollar value of those imported goods to get higher. We've lifted selling prices almost 30%, local suppliers mostly have lifted costs by at least 25%. Can't see this being resolved inside of a year, and also can't see it returning to the old prices, we won't.

CPI at 5% is nothing, wait till the real inflation rate shows up.

by imhenry | 28th Oct 21, 8:29am 1635362941

This Govt will have high tailed it to the U N when the S--- hits the fan.

by Cheetahlegs66 | 28th Oct 21, 10:05am 1635368714

Damn. Annualised freight charges $30m? Are you Toyota or the owner of BMW? That overhead must be one of the largest in the country.

by Carlos67 | 27th Oct 21, 1:54pm 1635296059

What is shows is we are still spending like there is no tomorrow, which under Labour is probably true.

by Fluffybunny | 27th Oct 21, 2:25pm 1635297919

What else you gunna do in lockdown. Read a book the whole time? Only putting it down to diligently home school my kids or attending our daily covid sermon?

Actually I need to buy the book first (opens amazon)

Time to end lockdown. Not at 90%. Now. The whole country is out of sync. Keeping the whole country caged up due to 2 deaths is not even close to rational.

by fortunr | 28th Oct 21, 10:38am 1635370731

Hear! Hear! We need to open the whole country now - everybody has had more than ample time to get vaccinated.

This Government has well departed from rationality in prolonging this lockdown.

by Roelof | 27th Oct 21, 3:44pm 1635302652

Tourism used to be an export earner... Up 20% of our exports

https://www.tia.org.nz/about-the-industry/quick-facts-and-figures/#:~:t….

by guwop | 27th Oct 21, 4:27pm 1635305263

Filthy tourists. Glad they're gone for good.

by fortunr | 28th Oct 21, 10:41am 1635370901

Who needs tourism ? Or a real economy ? Or an export sector at all ? Let's just keep selling houses to each other - isn't this the best way to get rich ?

by CWBW | 27th Oct 21, 5:19pm 1635308343

It'll be interesting to see the breakdown what in the world are we importing from Europe. The deficit generated from the European trades accounts a staggering 53.9% of all deficits in the top 5 import-export country list.

Are we buying discounted submarines from the French?

by WestieAJ | 27th Oct 21, 9:02pm 1635321740

The imports total is based on CIF. The F being freight. I wonder how much of that 1.5 B difference Sep 2020 vs Sep 2021 is freight cost. 40' container From China was 2k last year and 10k now

by AKLCrusader | 28th Oct 21, 8:18am 1635362304

We import a relatively low value commodity in high volumes. Freight used to equate to <15% of the cost of the raw material inside, now that comparison is over 65% of the value of the raw material inside the container.

by WestieAJ | 28th Oct 21, 11:15am 1635372927

The top 5 container lines control 65% of global trade volume. The next 5 in the rankings control another 20%. So the top 10 control 85%. They have quietly merged and consolidated with their competitors to build market share. Worldwide anti trust exemptions allow these companies to form route and vessel sharing alliances on key trade routes that control capacity and price. They have created a very effective monopoly with a huge moat around it.

The number 1 ranked line Maersk is set to make at least 25 billion profit for the 2021 calendar year

Container lines are the OPEC of the 2020's. Something that was cheap and plentiful (containerised freight) that everyone took for granted is now scarce and expensive (like early 70's oil). The shipping lines will use their market power to keep it that way for as long as possible.

by AKLCrusader | 28th Oct 21, 8:18am 1635362339

Grant Robertson: We're tracking better than planned, everything is just rosy, Nothing to see here..........

Jacinda Ardern: Wot?

So despite record agricultural earnings and inflation propping up the economy, the inbound costs are more than the import gains. I can't see how this is going to end well. Shame Robertson is still in denial and isn't taking steps to control unnecessary spending.