Prepared by the Economic Division at the Ministry of Foreign Affairs and Trade.
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Highlights
- New Zealand GDP shrunk 0.6 percent in the December quarter of 2022 according to Stats NZ. This comes after an increase of 1.7 percent in the previous quarter. Expenditure on GDP fell by 0.8 percent, while real gross national disposable income fell 1.7 percent.
- Cyclone Gabrielle has caused significant damage to homes, infrastructure, and livelihoods across northern and eastern regions of the North Island. The cyclone is New Zealand’s costliest non-earthquake natural disaster, with economic losses expected to exceed the $2bn-$4bn of losses of the 2016 Kaikoura earthquake. New Zealand’s primary sector exports will be largely unaffected, with the exception of apple exports, where orchards were hit hard as Gabrielle struck the Hawke's Bay during a key harvest period. Damage to orchards and farms is also likely to see some lost primary production beyond 2023 too. However, other key export industries such as dairy are expected to experience limited disruption.
- The Albanese Government is moving forward on its election commitment to phase out live sheep exports by sea, worth an estimated $92 million to the Australian economy. On 3 March, an independent panel was established with the task of undertaking a six-month consultation process on how it may happen. Western Australian stakeholders are considering taking legal action in response to any ban, pointing to the successful class action taken against the previous Labor government’s live cattle export ban in 2011.
- The Government’s sharp focus on trade continues with New Zealand set to host Trade Ministers and delegations from 10 Asia Pacific economies at a meeting of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) Commission members in July. Chairing the CPTPP Commission allows us to build on the success we’ve had opening trade opportunities by working with the membership to further regional economic integration and promote inclusive and sustainable trade that delivers economic opportunity, prosperity and benefits for all New Zealanders.
Domestic and Global Updates
Domestic
- The annual current account deficit grew $12.7 billion(external link) between 2021 and 2022, now at 8.9 percent of GDP. This represents the largest annual current account deficit to GDP ratio since 1988 – the largest prior to this was during the global financial crisis.
- The Government is delivering a coastal shipping lifeline(external link) for businesses, residents and the primary sector in the cyclone-stricken regions of Hawkes Bay and Tairawhiti, Regional Development Minister Kiri Allan announced last week. The Rangitata vessel has been chartered for an emergency coastal shipping route between Gisborne and Napier, with potential for the route to be extended to Tauranga and the South Island, using funding approved by Regional Economic Development Ministers.
Australia
- Australian Prime Minister Anthony Albanese recently concluded a 4 day trip to India that sought to deepen strategic, economic and people-to-people ties with India. At the Australia-India Annual Leaders’ Summit, Prime Ministers’ welcomed the entry into force of the landmark India-Australia Economic Cooperation and Trade Agreement (ECTA) on 29 December 2022 and committed to building on it by working to conclude the Comprehensive Economic Cooperation Agreement (CECA). The visit included a business delegation led by the Minister of Trade and Tourism and Resources Minister as the focus was on increasing two-way trade and business engagement under ECTA, thereby further strengthening existing people-to-people links and cultural exchange. The finalisation of market access for Australian Hass avocadoes to India and Indian okra to Australia was heralded.
Europe
- The European Central Bank has raised their interest rate from 2.5 percent to 3 percent. In following remarks the ECB noted that inflation is projected to “remain too high for too long.”
- The UK unemployment remains at 3.7 percent for January 2023. Growth in average total pay was 5.7 percent in January, slightly down from 6 percent in December 2022.
- Two weeks into spring the Netherlands has announced that COVID-19 is now in the endemic phase, meaning COVID-19 is no longer considered a pandemic in the Netherlands. There will be no new nationwide rounds of COVID-19 booster vaccinations in the Netherlands and the government has dropped the advice to self-test when symptomatic.
Americas
- Three US banks (Sillicon Valley Bank, Silvergate and Signature Bank) have collapsed in the space of a week following Silicon Valley Bank’s (SVB) initial collapse. SVB was subsequently taken over by federal regulators. It represents the largest failure of a US bank since 2008. In response to the crisis, US banks have lost $229bn USD of market value this month, according to the Economist.
Pacific
- New Zealand Foreign Affairs Minister Nanaia Mahuta reaffirmed her commitment to working together with the new Government of Fiji(external link) on issues of shared importance, including on the prioritisation of climate change and sustainability, at a meeting last week, in Nadi. New Zealand allocated NZ$20 million in flexible climate finance to support Fiji to deliver on its own climate change priorities. Minister Mahuta said “The investment enables us to support clean energy projects in developing countries and provide greater economic resilience to our region”.
- Fiji’s Deputy Prime Minister and Minister of Finance, Hon Biman Prasad, undertook a courtesy call on his New Zealand counterpart, Finance Minister, Hon Grant Robertson. The call was an opportunity to better understand the priorities and economic plans of a key regional player; and to better understand the assessment of a key senior member of the Rabuka Government of Fiji’s economy post COVID-19. Minister Prasad noted that Fiji was keen to attract foreign investment. To do this, Fiji needed to ‘get rid of bottlenecks’ in the system, which would require learning from countries like New Zealand on Ease of Doing Business.
Africa
- South Africa faces a bleak economic outlook in the near future, with GDP growth slowing to 0.3-0.9% in 2023 depending on whether load shedding resolves (highly unlikely) or worsens (very likely). In this year’s Budget, the government is continuing on its path of fiscal consolidation, using an increase in tax revenue to improve state power utility Eskom’s credit profile and provide tax incentives for solar energy in the hopes that this will contribute to solving the electricity crisis. For New Zealand, the impacts of load shedding remain manageable for its businesses located in South Africa due to their smaller footprints, and there are potential significant opportunities in the renewable energy space for companies with a high risk appetite.
Market reports released this week
- Read the previous global economic round-up
- The German tourism market: recent trends and sustainability initiatives – March 2023
- Indonesia introduces new import requirements – February 2023
External links
The following links may provide useful information to businesses:
NZTE(external link) has a website focused on providing COVID-19 information for exporters. They’ve also launched myNZTE(external link), an interactive digital portal of insights and tools available to all New Zealand exporters.
The Treasury releases a weekly economic update(external link) every Friday. Stats NZ has published a data portal(external link) with near real-time economic indicators.
MBIE publishes a sector reports series(external link) which provides regularly updated reports on all industry sectors that make up the New Zealand economy. These include official economic data and the challenges and opportunities that face New Zealand’s industry sectors.
Business.govt.nz(external link) provides tools and advice from across government to save small businesses’ time and help make the business a success.
MFAT has created a tariff finder(external link) which is designed to help goods exporters and importers maximise benefits from New Zealand’s Free Trade Agreements and compare tariffs in 136 other markets.
The all of government Trade Barriers(external link) website can be used to register any trade barriers experienced or issues exporting to an offshore market. Queries can be sent via the website or through the MFAT Exporter Helpline 0800 824 605. Enquiries will be sent to the government agency best placed to answer.
Tatauranga Aotearoa Stats NZ provides official data on the value of New Zealand’s exports and imports of both goods and services, by commodity type via the New Zealand Trade Dashboard(external link). This interactive dashboard is updated every quarter and allows for filtering by country and by commodity type.
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Disclaimer
This information released in this report aligns with the provisions of the Official Information Act 1982. The opinions and analysis expressed in this report are the author’s own and do not necessarily reflect the views or official policy position of the New Zealand Government. The Ministry of Foreign Affairs and Trade and the New Zealand Government take no responsibility for the accuracy of this report.