Will New Zealand Exports Reach 40 percent of GDP by 2025?
22 May 2014
The recently released budget paid little attention to the urgent need to help exporters, other than more cash being given to NZTE to help our exporters develop “Emerging” markets.
Nothing of any value was directed toward our Pacific exporters.
Few disagree that exports should be the key driver of productive growth given that it is a centerpiece of the Government's Business Growth Agenda aiming to lift exports from 30% to 40% of GDP by 2025.
This should be a good time to see some positive action being taken to promote NZ exports. Terms of trade are at their highest in 40 years (meaning export prices are strong relative to import prices).
Exports are falling well short of the Government's aim. Treasury's Budget data show they rose 2.6% in the year to March 2013 but fell 0.7% in the current year. In the next four years they are forecast to grow by 1.4%, 2.1%, 2.7% and 2.6%.
This forecast weak trade performance will deepen the deficit on our current account (which measures the sum total of all our trade and investment flows with the rest of the world). The deficit will deepen from a forecast 3.1% for the year to March 2014 to 6.3% for the March 2018 year.
This means that to finance the deficit more borrowing or selling more assets to overseas investors is inevitable unless significant action is taken to ensure New Zealand exports much more.
PEN's vision to work constructively to double current exports to Pacific Island countries over the next 5 years is very relevant and fundamental to the aim of the Business Growth Agenda.
PEN will be taking every opportunity to reinforce this message to the Government and its advisors in future.