International trade in services shows $5.4 billion deficit in 2021

International trade in services showed a deficit in 2021 following surpluses in 2020 and 2019, Stats NZ said today.

New Zealand’s services deficit reached $5.4 billion in the year ended December 2021, following a $1.0 billion surplus for the same period in 2020, and a $3.8 billion surplus in 2019.

Services exports fell by 25 percent from their 2020 figure to $13.9 billion, while services imports rose 11 percent to $19.3 billion.

Travel and transportation most affected by pandemic

The movement from surplus to deficit was driven by a $4.5 billion decrease (down 51 percent) in travel services exports (spending in New Zealand by overseas residents) in the year ended December 2021, largely due to a drop in travel, which was first seen in the second quarter of 2020 as the COVID-19 pandemic took hold.

The rising cost of freight was another driver of the $1.4 billion increase (up 44 percent) in transport imports incurred by local residents in the year ended December 2021. Transport spending by New Zealand residents has risen every quarter since the second quarter of 2020.

“The pandemic has had a marked influence on international trade in services in 2021,” international trade manager Alasdair Allen said.

“Lower numbers of international visitors and a narrowing of freight channels have had the largest impact on services. New Zealanders will be feeling the effects of both big movements off the back of a record year for goods imports.”

Telecommunications, computer, and information services imports also rising

Trade in telecommunications, computer, and information services also played a role in the move from surplus to deficit, with a 25 percent increase in imports amounting to $3.0 billion in 2021. This is largely due to spending by New Zealand residents on computer services, which include computer software, IT technical consulting, and IT support.

“Increased spending on streaming services and setting up for remote working has played a significant secondary role in the services deficit in 2021,” Mr Allen said.

Exports in intellectual property rise

Intellectual property exports increased by 28 percent in the year ended December 2021, reaching $1.6 billion, up $361 million on the same period in 2020. This was driven largely by the licensing of computer software.

Total goods and services moves into deficit

In the year ended December 2021, total goods and services imports rose 21 percent to $88.9 billion compared with December 2020, while exports fell 0.7 percent to $76.7 billion, resulting in a deficit of $12.2 billion. Total goods imported rose 24 percent to $69.6 billion, while exports rose 6.8 percent to $62.8 billion.