New data: Export earnings fall sharply as China slows and dairy slumps

Fonterra's branding at the China Dairy Expo and Summit in Xian. Photo / File

The value of goods exported by New Zealand fell $890 million (14 per cent) to $5.5 billion in July 2023, compared with July 2022, according to Stats NZ.

The fall in earnings was led by the dairy sector. Milk powder, butter, and cheese (our largest export commodity group) fell by $350 million (19 per cent), to $1.5 billion.

Recent fears about the slower growth of the Chinese economy were cited in a 24 per cent fall in exports to China for the month, compared with a year earlier.

There were also sizeable falls in earnings for meat exports and logs - off 21 per cent and 18 per cent respectively.

The monthly trade balance was a deficit of $1.1 billion, Stats NZ said.

Offsetting the fall in export earnings, New Zealand’s total imports also fell sharply in July, although much of that was due to lower petroleum prices.

Goods imports fell $1.2 billion (16 per cent) in July 2023 compared with July 2022, Stats NZ said.

This followed a rise of $1.6 billion (26 per cent) in July 2022 compared with July 2021.

The increase in 2022 was led by petrol and diesel imports, after the Marsden Point refinery ceased refining crude oil in April 2022.

On an annual basis, goods exports were worth $71.8 billion, up $3.9 billion from the previous year.

Annual goods imports were valued at $87.6 billion, up $7.7 billion from the previous year.

The annual trade deficit was $15.8 billion, compared to a deficit of $12 billion in the year to July 2022.

Concerns are growing about the impact of the slowing Chinese economy on New Zealand.

Last week Fonterra cut its milk price forecast due to weak Global Dairy Trade (GDT) auction prices, which have seen whole milk powder fall to five-year lows.

The co-op now expects a milk price for the 2023/24 season in a range of $6.00 - $7.50 per kg, with a midpoint of $6.75 per kg.

Dairy NZ has said farmers need $7.51 per kg to break even.

The news was brighter in the horticulture sector with the value of fruit exports up 9 per cent.

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.