Merchandise exports lower
The total export value for the year ending December 2020 is just $230 million lower when compared to the year ending December 2019, but is $2.4 billion higher when compared to the year ending December 2018. This shows that while export values have fallen during 2020, they are still relatively high compared to export values just two years ago.
After a turbulent year in 2020, due to COVID-19 and logistic issues, annual merchandise exports, as shown in the figure below, have been in decline since March 2020. For the year ending December 2020, the value of total merchandise exports was $57.6 billion, down almost a billion dollars from $58.5 billion in annual exports in March 2020.
Analysis reveals that the commodities showing some of the largest absolute declines in annual exports since March 2020, are oil down $341 million, dairy down $325 million, fish down $196 million, meat down $190 million, and mechanical machinery down $185 million. As shown in the figure below, we can see the small decline in dairy exports across the 2020 year. There is some good news here in that dairy annual exports are still at quite a high level, and well above the export values seen just a few years ago in 2016.
But not all commodities saw a decline in annual values, kiwifruit was up $302 million, with honey up $125 million, wine up $107 million, casein up $87 million, and avocadoes up $65 million. As shown in the figure below kiwifruit exports are now at their highest ever annual total, at $2.7 billion. A big part of the increase in kiwifruit export values is the gold kiwifruit, which now makes up 66 percent of the total volume of kiwifruit exports. Gold kiwifruit on average generates $2 a kilogram more in export receipts than our green kiwifruit.
Overall New Zealand’s merchandise export values are lower than prior to the onset of the COVID-19 pandemic. Given the disruption the pandemic is causing overseas, as well as to transportation systems, we can expect that throughout 2021 to see export values remain relatively stable. This is partly due to the nature of our exports (being food and other raw materials), as well as our largest trade partners China and Australia, which have seen a relativity smaller disruption to their economies from COVID-19, then other trading partners.
New Zealand exports have also benefited from the establishment of the International Air Freight Capacity (IAFC) scheme setup by the New Zealand Government and funded through to the end of March 2021. This scheme has enabled some international air freight capacity to be maintained, despite the small volume of passenger flights into and out of the country, due to COVID-19.
The newly signed upgraded free trade agreement with China (signed 26 January 2021), once ratified by both countries may also provide a welcome boost to New Zealand exports, with tariff and non-tariff barriers on exports to China, to be reduced over the next 10 years.