Page 6 – External trade
Since New Zealand engaged with the world economy in the 19th century it has had a high level of trade. In 2003 exports represented almost a quarter of the gross supply of goods and services in the economy.
The export sector has experienced major changes since the 1960s. At that time over 90% of exports were farm products, mainly in the form of crude commodities such as bales of wool, carcases of meat, and crates of butter and cheese. Few services were exported and two-thirds of all exports went to Britain.
By the 2000s New Zealand was still a specialist exporter of primary products. Depending on the precise measure, exports from farm, forests, fisheries and mines followed by secondary sector processing made up about two-thirds of all merchandise exports, but slightly less than half when service exports are included.
The nature of those exports has changed. Exports from the farm now include horticulture (whether cut flowers, kiwifruit, apples, vegetables, or wines). These exports tend to be much more sophisticated, with more processing beyond the farm gate. The old standbys – wool, butter and cheese – which had together earned half of New Zealand’s exports by value in 1965, each contributed under 4% of exports in 2001. Dairy products are still 16% of the country’s exports by value, but most went in the form of milk powder, not butter or cheese. Meat, which had been almost 30% in the mid-1960s, was down to 10%.
Primary sector exports in 2004 included:
- forest products such as sawn and rough wood, pulp and paper, which are 10% by value of exported commodities
- fish, squid, mussels and crayfish (about 5%)
- minerals, oils and the exploitation of power sources through such developments as aluminium processing (over 8%).
Goods and services
The manufacturing sector is a major exporter either by processing and value adding to the primary sector exports, or by general and specialist products in their own right. Among the extraordinary range of goods sold overseas are whiteware (fridges and dishwashers), electric fences, newsprint and furniture.
In some respects the biggest change came in the provision of services, which by 2001 were contributing about a quarter of the country’s export receipts. This was very largely a result of the rise of international tourism to New Zealand, although other service activities (most noticeably the film industry) also made a considerable contribution.
Export destinations have changed dramatically too. Australia is now the largest export market (with over a fifth of exports in 2004), followed by the United States (with over a seventh), then Japan and China. In only fifth place came the United Kingdom (with under a 20th of exports), which still imported meat and dairy products. Of course if we look at markets rather than countries, the European Union was New Zealand’s second largest single market. The Asian region takes about a third of all New Zealand exports.
As a general rule the revenue from exports did not pay for all the imports of goods and services plus the interest and profit payments to foreigners. That means most years New Zealand had a current account deficit. This deficit represents foreigners’ investment in New Zealand.