In our last Economic Weekly, we noted the peculiar truth that the New Zealand economy is hotting up, despite the multibillion-dollar hole left by the absence of most of the tourism sector. In part, that’s because while it’s been a grim eighteen months for our service exports, NZ’s goods exports are enjoying a golden run.
We were given a reminder of this last Friday, with Stats NZ’s release of the monthly merchandise trade for May. The big headline was the circa 31% year-on-year recovery in imports (a function of their massive crash during lockdown this time last year) hidden in the trend was the news monthly goods exports hit their highest level ever at a cool $5.9 billion.
The achievement caps a remarkable eighteen months for the sector, with export values surprising forecasters with their resilience through the pandemic. It’s a microcosm of the broader strength of international goods trade through the pandemic, which wrongfooted expectations for a collapse in activity amid COVID’s unprecedented demand and supply shocks (see The Economist’s piece last year likening this to the scene in Kill Bill where Uma Thurman’s character punches her way out of a coffin).
Now, as the global economy emerges from the worst of the pandemic, the outlook for the export continues to improve. Surging commodity prices are the big driver – as consumption has recovered overseas, global supply has struggled to keep up with demand, boosting prices for dairy, meat and forestry products by between 10 and 30% each since the beginning of the year (to continue the Tarantino metaphor, the impact on export revenue is akin to the adrenaline shot administered by John Travolta in Pulp Fiction). Despite all the headlines about shipping bottlenecks and widespread logistics disruption, NZ export volumes are also holding up well, as we noted a couple of weeks ago.
Having survived the challenges of COVID thus far, battling protectionism and global geopolitics are the next big challenges for the export sector. Last week saw mixed signals on that front. On the one hand, the US and EU moved to resolve the world’s longest running trade dispute. On the other hand – closer to home –Aussie-China trade tensions have escalated further, with a new anti-dumping complaint raised before the WTO.
We are hopeful that global policymakers will remain mindful of the win-win gains to be had from trade, and the world can avoid a protracted surge in protectionism. Still, the export sector may need to continue employing some of that same resilience it’s shown through the pandemic – leveraging strong relationships offshore and diversifying into new markets as much as possible.
Originally hailing from sunny Nelson, Jane moved to Auckland to join the ASB team in 2008. As Senior Economist, Jane's main focus is co-ordinating the team’s macro-economic forecasts. In this key role, Jane was thrilled by the team’s twice consecutive win of the Consensus Economics Forecast Accuracy award.
During her decade-long career in economic forecasting, Jane has gained a thorough knowledge of the New Zealand economy. Her current focus is on New Zealand GDP growth, including both manufacturing and the construction sectors. She has spent time forecasting most sectors of the economy, including inflation, trade, housing, labour and financial markets.
Prior to joining ASB, Jane honed her macro-economic forecasting skills at the Reserve Bank of New Zealand. Jane is a qualified scarfie, attending Otago University and graduating with a Bachelor of Commerce in Economics with 1st class honours. In 2014, she took a career break from ASB to travel the world and learn to snowboard.
Mark joined ASB in 2017, with over 20 years of public and private sector experience working as an economist in New Zealand and the UK.
His resume includes lengthy stints at ANZ and the Reserve Bank of New Zealand, and he has also worked at the Bank of England, HM Treasury and the New Zealand Transport Agency. Mark's areas of specialisation include interest rate strategy, macro-economic analysis and urban economics.
Born and bred in the Waikato, Mark studied at Waikato University where he graduated with a Master of Social Sciences, majoring in Economics.
Mark's key strengths are the ability to use his extensive experience, inquisitive nature, analytical ability, creativity and pragmatism to dig a little deeper and to deliver common sense solutions to tackle complex problems.
When not at work Mark likes to travel, keep fit and spend time with his friends and family.