New Zealand primary exports tipped to recover despite trade risk
NEW Zealand’s primary exports are projected to rebound from a sharp decline in the year to June 2024, when softer demand in China depressed prices for commodities such as dairy and lumber.
Exports are forecast to gain 6.8 per cent to NZ$56.9 billion (S$44.3 billion) in the 12 months to June 2025 after falling 7.1 per cent in the year year-earlier period, the Ministry for Primary Industries said in its semi-annual outlook published on Thursday (Dec 12) in Wellington. The forecast is less than the NZ$58 billion officials projected in their mid-year report.
New Zealand is the world’s biggest dairy exporter and shipments of meat, wool, forest products, kiwifruit and seafood are also key drivers of economic growth. Still, an increased reliance on China – which takes almost a third of its primary exports – exposes it to slowdowns in that market.
“China’s position as a major importer means its sluggish economic and trade performance is likely to have a knock-on effect on the global economy,” the ministry said. “The effect will be greater on nations and sectors that are more exposed to China’s economy and import demand.”
Officials said the 2023 to 2024 decline in exports was the result of lower prices, which reflected slower global growth especially in China as well as increased supplies of dairy and meat.
By contrast, tightening supplies of dairy, beef and seafood are tipped to push prices up in the current year, while New Zealand production has increased, the ministry said.
Still, “uncertainty surrounding the outlook is high, with the balance of risks tilted to the downside”, it said. “Newly elected governments in 2024 could introduce significant shifts in trade and fiscal policy. Further intensification of geopolitical tensions could weigh on trade and investment.”
The ministry said higher tariffs on US imports may impact inflation and demand in that economy, which is New Zealand’s second-biggest market for primary exports.
“If the US economy weakens as a result, demand for New Zealand exports could decline and have potential spillover effects on other global export markets,” it said. BLOOMBERG
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