Total merchandise imports and exports

IBISWorld forecasts the total value of merchandise trade to increase by 1.3% in 2024-25, to reach $149.9 billion. Merchandise trade imports slumped in the early stages of the year, as the economy witnessed a significant reduction in the value of vehicles, parts and accessories imported. Over the year, a decline in the value of merchandise trade imports is expected as import prices continue to fall from the high levels seen in 2022-23. Despite the anticipated decline in imports in 2024-25, demand for New Zealand's exports will be supported by the New Zealand-European Union Free Trade Agreement (NZ-EU FTA), which came into force in May 2024. The NZ-EU FTA will allow growth in dairy and beef exports to Europe, where it has historically been constrained by limited quotas and high tariffs. Growth in the value of exports is expected to offset the impact of declining import values, contributing to a low overall growth rate in the total value of merchandise trade in 2024-25.

The COVID-19 pandemic -significantly influence international trade during 2020-21, leading to a substantial decline in the value of merchandise imports and exports. Restrictions on domestic travel and other government measures in New Zealand and overseas caused a global economic slowdown, leading to a fall in exports and imports. Imports were affected by global supply chain issues and significant congestion at major New Zealand ports that constrained sea trade volumes, while exports faced challenges because of depressed global demand and lower dairy and commodity prices. However, merchandise trade values rebounded strongly in 2021-22 and 2022-23. Large spikes in oil prices due to the Russia-Ukraine conflict caused the value of refined petroleum imports to skyrocket, as New Zealand's reliance on imported fuel meant that price increases had a minimal effect on demand. The value of road vehicle imports also jumped as consumers could travel again after the relaxation of pandemic restrictions. Dairy prices also expanded significantly during this period, which supported growth in merchandise trade value from export markets.

In 2023-24, demand for trade benefitted from the entry into force of the New Zealand-United Kingdom Free Trade Agreement (NZ-UK FTA). While dairy and meat exports increased in volume, sharp declines in prices that had supported record export revenue in previous years caused the total value of exports to decline. The value of imported merchandise also slumped in 2023-24. Petroleum import prices fell significantly after reaching record highs in 2022-23. The volume of road vehicle imports also fell significantly. Given that petroleum and road vehicles comprise around 20.0% of New Zealand's imports, the poor performance of these commodities was a significant driver of the 11.2% decline in the total value of merchandise trade imports 2023-24. Weak household economic conditions, including low consumer sentiment and household discretionary incomes also constrained consumer spending, which limited demand for imports. Overall, IBISWorld forecasts total merchandise imports and exports to grow at a compound annual rate of 3.8% over the five years through 2024-25.