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What's going on with New Zealand's trade deficit?

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"As a country, we won’t get rich selling things to ourselves"

These words from former NZ Prime Minister John Key have stuck with me since he said them in 2015 to mark the conclusion of negotiations of the Trans Pacific Partnership (TPP).

International trade was a top priority for the Key government, and his successor Prime Minister Bill English who contested the 2017 election campaigned on how important trade is to boosting livelihoods.

During this election the National Party was one of Topham Guerin's first clients, and as you can see we had some fun working on the creative content for that election.

While National and Bill English lost that election, six years later voters in NZ look likely to elect another National-led government.

So after six years of a Labour-led government, how is NZ tracking these days when it comes to trade?

Let's take a look at the most recent international trade data from Statistics NZ. For the June 2023 quarter:

  • NZ had a trade deficit of $1.3b for the quarter - meaning we imported more than we exported.
  • Just three countries (China, Australia and the US) accounted for more than 51% of all NZ exports.
  • Telecommunications, computer, and information services were just 1.9% of exports, while "other business services" were 2.9%.
  • NZ's world-beating wine industry had the same share of exports (1.7%) as intellectual property charges.
  • Meat, dairy, wood, fish and fruit accounted for half of all NZ exports (with milk powder, butter, and cheese 21.9% of the total).

Now for sure, NZ has some of the world's best agricultural and primary products - but our economy is still hugely reliant on these sectors and a small number of export markets.

So when there there are downwards market conditions like the current drop in global dairy prices, we're on shaky ground.

NZ's economy is more volatile than it needs to be, and an overconcentration of a handful of export markets and an insufficiently diversified economy are partly to blame.

The best way to increase living standards in NZ is to bring more money into the country - and that's got to happen by diversifying our export sectors and export markets.