Rising import prices drive increase in trade deficit

The total trade deficit increased in the September 2022 quarter to $7.5 billion, driven by increases in import prices, Stats NZ said today.

Compared with the September 2021 quarter, total imports of goods and services rose $5.6 billion (23 percent) to $29.7 billion, while total exports of goods and services rose $4.5 billion (25 percent) to $22.2 billion.

Goods imports rose $3.7 billion (19 percent) to $22.7 billion, while goods exports rose $3.1 billion (21 percent) to $17.5 billion. These increases were driven by rising prices, with import prices (up 25 percent compared to the previous September quarter) rising faster than export prices (up 18 percent).

Petroleum and petroleum products led the increase in import prices this quarter.

Petroleum and products imports have been driving the increase in goods imports over the past 12 months. Petroleum and products imports (especially diesel and petrol) have risen 90 percent in value compared with a year ago.

The Marsden Point refinery ceased operation in April 2022 .

Other commodities to contribute to the increase in goods import values in the September 2022 quarter were:

• electrical machinery and equipment, up $313 million (20 percent)
• mechanical machinery and equipment, up $219 million (8.5 percent)
• vehicles, parts, and accessories, up $190 million (7.4 percent).

"Inflation is a global reality, which means New Zealand importers are paying more for goods, many of which are essentials like fuel," international trade manager Alasdair Allen said. "A falling New Zealand dollar also has an upward effect on import prices and their New Zealand dollar values."

Return of widespread international travel boosts both imports and exports

In the September 2022 quarter, there was an increase in the number of international travellers. This has led to an increase in both exports and imports of travel services.

While international traveller numbers increased for both arrivals and departures, neither has yet returned to pre-COVID levels .

Within the travel category, personal travel led the increase, up $635 million from the September 2021 quarter to $905 million.

"While we have seen increasing numbers of international visitors to New Zealand, the tourism industry has not yet fully recovered. Although we did see tourists in the September quarter, for example visiting our ski fields, many visitors have been taking the opportunity to visit friends and family," Allen said.

Australia dominated both travel exports and imports in the September 2022 quarter.

"September quarters are traditionally the peak time for New Zealanders to travel overseas," Allen said. "This year, many New Zealanders took advantage of the relaxation of travel restrictions to spend some time in the sun, or to visit friends and family."

"Increased international travel doesn't just lead to increases in travel services, but also other categories like aircraft maintenance services, transportation services in the form of airfares, and demand for fuel," Allen said.

Higher prices lead to rise in exports

Total export prices have been increasing since the March 2021 quarter. Dairy prices led the increase in export prices in the September 2022 quarter. Dairy export values rose $1.4 billion (49 percent) to $4.4 billion, compared with the September 2021 quarter.

Other commodities to contribute to the increase in goods export values were:

• meat and edible offal, up $412 million (22 percent)
• preparations of milk, cereals, flour, and starch (includes infant formula), up $198 million (40 percent)
• casein and caseinates, up $167 million (64 percent).

Services exports rose $1.4 billion (43 percent) to $4.7 billion compared with the September 2021 quarter.

The movements of our top services export categories in the September 2022 quarter compared with the September 2021 quarter were:

• travel services, up $955 million to $1.8 billion
• transportation services, up $309 million to $673 million
• other business services, up $71 million to $659 million
• telecommunications, computer, and information services, up $21 million to $442 million
• charges for the use of intellectual property services, up $20 million to $419 million.