Annual goods trade surplus at 28-year high

New Zealand’s annual goods trade surplus reached a 28-year high of $2.2 billion as imports tumbled in the year ended October 2020, Stats NZ said today.

“This is the largest annual surplus since the July 1992 year, driven mainly by much lower imports after the global COVID-19 pandemic hit, while New Zealand’s exports have held up,” international trade manager Alasdair Allen said.

Annual imports fell $6.5 billion (10 percent) to $58 billion in the year ended October 2020. In the same period exports rose $734 million (1.2 percent) to $60 billion.

“Imports are down in part because of restrictions on international and domestic travel imposed in March to slow the spread of the pandemic,” Mr Allen said.

“That can be seen in the big drops in annual imports of things like turbojets, fuel, and cars.”

In contrast, annual exports for some key goods such as dairy products and fruit are higher than a year ago, though seafood and forestry export values are lower.

Monthly imports drop in October

Imports fell $759 million (13 percent) to $5.3 billion in October 2020 compared with October 2019, led by mechanical machinery and equipment.

Imports typically rise in the months leading up to the Christmas holiday period.

“Monthly imports reached an unusually low point in May this year after the first COVID-19 lockdown, but have generally risen since then, showing a typical seasonal pattern,” Mr Allen said.

In October 2020, car imports rose to almost $400 million in the month, continuing a recovery from low levels in April. Imports of cars and trucks dropped sharply in April and May as COVID-19 disrupted both the international supply chain and the local demand for new vehicles, with car dealerships closed during the level 4 lockdown which ran until 27 April.

Exports continue to fall in October

Exports fell $222 million (4.4 percent) to $4.8 billion in October 2020 compared with October 2019, with dairy products and meat down in the same period last year.

Monthly exports typically start rising at this time of year after a low point in August, but this year the increase has been smaller than usual. The biggest falls in October 2020 were milk powder, butter, and cheese, down $198 million, and meat, down $112 million, reflecting lower values for sheep meat. Both values and quantities were down for dairy products and meat in October 2020, compared with the same month last year.

The falls in some exports were partly offset by a rise in log exports (up $108 million).

Aircraft and parts exports were up $69 million on the same month last year. This year, aircraft have been sent to the United States for long-term storage as New Zealand’s border closure restricts international travel. Exports of breathing equipment were also up in October.

Monthly trade balance

The monthly trade balance in October 2020 was a deficit of $501 million. The average trade balance for the previous five October months was a deficit of $977 million.