Weak Shipments To China Weigh On Export Growth

The June non-seasonally adjusted merchandise trade surplus widened to $699mn from a downwardly-revised $54mn with the YTD deficit narrowing to $9.4bn from $10.2bn. Exports outperformed imports again but turned down to -0.1% y/y while imports sank 13% y/y aiding continued improvement in the trade position. Imports of consumer goods were at their lowest level since February 2022 in line with the weak domestic economy and outlook, but the rate of contraction has stabilised.

• Exports to China and Australia continue to contract while there is a strong trend to the US, Europe and Japan. China is NZ’s most important export destination worth almost 27% of the total in 2023 and over 5% of GDP. The US is gradually becoming more important though with the export share rising 2pp to 12% in 2023 and up 0.9pp to 12.9% in H1 2024.

Source: MNI - Market News/Refinitiv

• Consumer goods imports fell 9% y/y in June with the 3-month average improving to -2.5% y/y. On the capex side, plant & machinery imports were also weak down 12.8% y/y, but transport equipment rose 30.9% y/y.

Source: MNI - Market News/Refinitiv

• The seasonally adjusted goods trade deficit narrowed in June to $334mn from $981mn but Q2 saw a widening to $2.2bn from $1.5bn in Q1. Depending on the other components, this result may weigh on the balance of payments improvement. The current account deficit only improved 0.1pp to 6.8% of GDP in Q1 but is down from a peak of 8.8% in Q4 2022, but further progress is needed. Q2 is released on September 18.