Total export receipts are continuing their upward trend, but several potential speed bumps are visible on the horizon.
The ongoing tensions between the USA and China, two of our biggest trading partners has potential to test our neutral stance, and now it appears the NZ/China relationship has its own issues. Over the ditch the Australian economy is experiencing some speed wobbles, with a surprise drop in GDP in the September quarter. Meanwhile the UK is getting ever closer to their exit from the EU – deal or no deal.
As a small trading nation NZ is reliant on the health of our trading partners to sustain our own export economy.
After an extended period of a high Kiwi dollar, the exchange rate finally softened earlier in the year helping to drive a bumper year for the horticulture sector. The Kiwi dollar then rebounded through November and December which contributed to less impressive results as exporters receive less for their goods sold overseas. The high point of 2018 was October with monthly exports reaching $6.1 billion.
Here at home the kiwifruit season is completed, with export volumes in October, November, and December 2018 all well up on a year ago due to a bumper crop. Prices are holding up well delivering record high receipts in both April and May of 2018. Apples too are combining good volumes and continuing favourable prices.
Forestry too was breaking records in 2018 with record high volumes and receipts due in part to an increased share of the global market. Several pressures including lower prices and reduced demand are being predicted for 2019.
Honey prices continue to climb, but receipts took a dive since its high in March, due to a decline in volumes. Forestry prices remain fairly static, but increased volumes are driving increased returns.
Fish exports remain healthy with receipts continuing to climb despite a drop in volume. A major contributor has been prices for mussels and squid climbing steadily for the last two years.
Dairy receipts remain healthy with the 12 month total volumes up slightly in the latter part of 2018 and prices holding fairly steady. Farmers will be pleased given the challenges they are facing with water quality issues and the agreement that the sector will meet 94 percent of the M.bovis cost share.
Overall the value of goods exports in the year to December 2018 rose 7.2 percent to $57.5 billion. The annual trade deficit of $5.9 billion remains concerning.