“The biggest letdown for Kiwi exports was the dairy industry,” economist Shannon Nicoll, at Moody’s Analytics, said.
A 31 per cent year-on-year drop in value took dairy exports down to NZ$459 million. Milk powder, which accounted for almost half of dairy exports by value, led the way with a 30 per cent tumble, Nicoll said.
This came as the unit price fell 23 per cent and volumes 9.3 per cent. The next two largest dairy exports, milk fats and cheese, also suffered lower unit prices and quantities.
The dairy setback came as weakening Chinese demand for Kiwi goods extended; exports to China have been falling in year-on-year terms since May.
Meat exports were also off, year on year.
Of the $115m drop in meat exports in the latest print, China’s drop in imports accounted for $84m, Nicoll said.
“Unfortunately, there wasn’t any growth on the exports side to counter the blows in agriculture. The largest rise was a $37 million jump in exports of mechanical machinery and equipment.”
New Zealand’s goods trade would face headwinds in the coming months, Nicoll said.
“Slower global demand and continued subdued trade with China could spell trouble for exports. On the opposite side of the equation, consumer-sensitive imports will likely be troubled by a weak domestic economy.”
Of our top 15 export commodities for the year ended September 2023, China was our top trading partner for seven of those commodities, Stats NZ noted.
In the year ended September 2023, China received 27 per cent of the total value of New Zealand’s total goods exports ($70.4b). By comparison, in the year ended September 2013, China received 18 per cent ($8.3b) of New Zealand’s total goods export values ($46b).
“Over the past decade, exports to China have been steadily increasing, with a flat period during Covid-19, but in recent months this has started to shift,” international trade manager Alasdair Allen said.
China’s economic growth has been lower than widely forecast this year as the recovery from the pandemic takes longer than expected.
On the plus side, there has been a rebound in global dairy prices over the past several weeks, suggesting Chinese consumer demand may finally be recovering.
