New Zealand's economy received a significant boost in the September Quarter of 2025, as the nation's international trade figures revealed a sharp surge in both goods and services exports. This robust performance, with total exports climbing to NZ$25.0 billion, marks a substantial 12% increase year-on-year, providing crucial support to the domestic economy and signalling continued global appetite for New Zealand's primary products.
However, the celebratory mood is tempered by a notable deterioration in the terms of trade, indicating that while export volumes and values soared, the prices fetched for these goods on the international market faced downward pressure. This nuanced picture presents a complex scenario for the island nation, highlighting both the resilience of its export sectors and the challenges posed by fluctuating global commodity prices and a potentially weakening New Zealand dollar.
Export Boom Details and Economic Repercussions
The September Quarter of 2025 (July-September 2025) witnessed a remarkable expansion in New Zealand's export sector, with total exports of goods and services reaching NZ$25.0 billion. This represents a substantial increase from NZ$22.3 billion recorded in the same quarter of 2024. The growth was broad-based, encompassing both merchandise and services exports. Goods exports, in particular, saw a 13% rise to NZ$17.7 billion for the quarter, with key agricultural commodities leading the charge. Milk powder, butter, and cheese exports surged by 27%, while meat and edible offal saw a 24% increase. Horticultural products also contributed significantly, with kiwifruit exports rising by an impressive 36% for the year ended September 2025. Services exports also played a vital role, increasing by 9.8% to NZ$7.3 billion, largely driven by a NZ$400 million rise in travel services.
This export boom has had several immediate and positive implications for the New Zealand economy. The monthly trade deficit narrowed significantly to NZD 1.4 billion in September 2025, a considerable improvement from NZD 2.2 billion in September 2024. More broadly, the annual trade deficit for the period of January-September 2025 saw a dramatic reduction to NZD 0.2 billion from NZD 5.8 billion in the previous year, alleviating pressure on the nation's overall trade balance. This strong export performance is a key driver for economic recovery, contributing to better-than-expected GDP growth earlier in 2025 and fostering increased business confidence and investment across various sectors, especially in rural, export-dependent industries.
Despite the robust export volumes and values, a critical factor emerged from the data: a 2.1% quarter-on-quarter fall in New Zealand's merchandise terms of trade during Q3 2025. This deterioration was primarily due to a 1.6% decline in export prices, while import prices simultaneously rose by 0.5%. This indicates that New Zealand exporters were earning less for their goods on the global market, even as they were selling more, and simultaneously paying more for their imports. This dynamic suggests a softening in global commodity prices, which could exert downward pressure on the New Zealand dollar (NZD), especially when combined with factors like the 3.4% drop in Fonterra Global Dairy Trade whole milk powder prices in November 2025 and lower domestic inflation.
The primary stakeholders benefiting from this surge include New Zealand's agricultural sector, particularly dairy farmers, meat producers, and horticulturalists. Major export destinations such as China (24% increase), Australia (28%), the United States (10%), the European Union (15%), and Japan (23%) underscore the global reach and demand for New Zealand's products. While the export growth is a positive sign for the economy, the weakening terms of trade present a challenge, indicating that the benefits of increased volume are somewhat offset by lower per-unit earnings.
Corporate Winners and Market Dynamics
The surge in New Zealand's exports during the September Quarter 2025 is poised to create distinct winners and losers among public companies, particularly those heavily reliant on the nation's primary industries and international trade. Dairy giants like Fonterra Co-operative Group Limited (NZX: FCG) stand to benefit significantly from the increased volume of milk powder, butter, and cheese exports, which saw a 27% rise. While the recent dip in Global Dairy Trade (GDT) prices in November 2025 presents a future headwind, the strong export volumes in Q3 2025 would have bolstered revenues and potentially improved capacity utilization. However, the deteriorating terms of trade, meaning lower export prices, could squeeze profit margins if not effectively managed through cost efficiencies or hedging strategies.
Meat processors and exporters, such as Silver Fern Farms Limited (NZX: SFF) and Alliance Group Limited, would also have experienced a positive impact from the 24% increase in meat and edible offal exports. Higher demand from key markets like China and the US translates into greater sales volumes. Similarly, horticultural companies, particularly those involved in kiwifruit exports, like Zespri International Limited (unlisted but a major industry player), would have seen substantial gains from the 36% rise in kiwifruit exports for the year ended September 2025. These companies benefit from robust international demand for premium New Zealand produce, enhancing their market share and brand recognition globally.
Conversely, companies heavily reliant on imports or those with significant foreign currency exposure could face challenges due to the rising import prices and potential downward pressure on the New Zealand dollar. Retailers and distributors importing finished goods or raw materials might see their input costs increase, potentially impacting their profitability or forcing them to pass on costs to consumers. Furthermore, while the overall trade balance improved, the underlying weak domestic demand reflected in slower import growth (1.6% in September) suggests that companies focused primarily on the domestic market might still be grappling with subdued consumer spending and economic activity within New Zealand.
Logistics and shipping companies operating in and out of New Zealand, such as Mainfreight Limited (NZX: MFT), are likely to be among the beneficiaries of increased export volumes, translating into higher freight demand and revenue. Their services are critical to facilitating the movement of goods to international markets. However, their profitability could be influenced by global shipping rates and fuel costs. Overall, the Q3 2025 trade data paints a picture of resilience and growth for New Zealand's export-oriented firms, albeit with a caveat regarding the profitability challenges posed by the softening global commodity prices.
Wider Significance and Global Context
New Zealand's robust export performance in the September Quarter 2025, despite the challenging global economic environment, underscores the enduring strength of its primary industries and their critical role in the national economy. This event fits into a broader global trend where agricultural and food-exporting nations are capitalizing on sustained worldwide demand for essential commodities, even as manufacturing and industrial sectors in many developed economies face headwinds. The significant increases in dairy, meat, and horticultural exports highlight New Zealand's competitive advantage in these sectors, driven by strong agricultural practices and established international trade relationships.
The ripple effects of this trade surge extend beyond New Zealand's borders. For its major trading partners, particularly China, Australia, the United States, the European Union, and Japan, the increased imports from New Zealand signify continued confidence in the quality and reliability of its products. This stable supply chain for key food items contributes to food security and consumer choice in these nations. However, the deteriorating terms of trade for New Zealand suggest a potential shift in global commodity pricing dynamics, where increased supply or softer demand for certain goods might be leading to lower prices, even for high-quality products. This could set a precedent for other commodity-exporting nations, hinting at a period where volume growth might not always translate into proportional revenue growth.
Regulatory and policy implications in New Zealand may include a renewed focus on supporting export-oriented businesses through trade agreements, export promotion initiatives, and infrastructure development to handle increased trade volumes. The government might also need to address the impact of the weakening terms of trade on farmer incomes and overall economic stability, potentially through targeted support or currency management strategies. Historically, New Zealand's economy has always been highly susceptible to global commodity price fluctuations. This current scenario, where export volumes are strong but prices are softening, echoes past periods where the country had to navigate the complexities of international markets to maintain economic stability.
This event also highlights the importance of diversification within the export basket. While dairy and meat remain dominant, the substantial growth in kiwifruit exports demonstrates the value of developing high-value horticultural products that can command premium prices and contribute significantly to overall export earnings. The strength in services exports, particularly tourism, also indicates a successful recovery and diversification away from sole reliance on goods, providing a more balanced and resilient economic base.
The Road Ahead: Navigating Opportunities and Challenges
Looking ahead, New Zealand's export sector faces a mixed bag of short-term and long-term possibilities. In the short term, the strong momentum in export volumes is likely to continue, especially for agricultural commodities as global demand for food remains robust. This sustained demand should continue to support rural economies and export-oriented businesses. However, the persistent downward pressure on export prices, as indicated by the deteriorating terms of trade and recent dips in global dairy prices, will be a critical factor to watch. Companies will need to prioritize cost efficiencies, innovate in value-added products, and explore new markets to mitigate the impact of potentially lower profit margins.
In the long term, New Zealand's strategic pivots will likely involve further diversification of its export base, emphasizing high-value, niche products beyond traditional commodities. Investment in technology and sustainable practices within agriculture will be crucial to maintain a competitive edge and meet evolving global consumer preferences. The government and industry bodies may also intensify efforts to secure and expand free trade agreements, ensuring market access and reducing trade barriers for New Zealand exports. The recovery of international tourism, as evidenced by the rise in services exports, presents a significant long-term opportunity for economic growth and diversification away from purely goods-based trade.
Market opportunities may emerge from increasing demand in developing economies and the growing global preference for sustainably produced, high-quality food products, where New Zealand has a strong reputation. Challenges will include navigating geopolitical uncertainties, managing inflationary pressures on import costs, and the ongoing volatility of global commodity markets. The potential for a weaker New Zealand dollar, while making exports cheaper and more competitive, also increases the cost of imports, creating a delicate balance for policymakers and businesses.
Potential scenarios range from a continued robust export performance, where volumes compensate for softer prices, leading to moderate economic growth, to a more challenging environment where sustained price declines significantly impact exporter profitability and overall economic sentiment. Strategic adaptations will be required from companies to build resilience against price volatility, possibly through hedging strategies, forward contracts, and focusing on direct consumer relationships to capture more value.
Concluding Thoughts: Resilience in a Volatile World
The September Quarter 2025 trade surge for New Zealand stands as a testament to the resilience and adaptability of its export-driven economy. The sharp rise in both goods and services exports underscores the nation's capacity to meet strong global demand for its primary products and tourist experiences. Key takeaways include the significant improvement in the trade balance and the vital support provided to domestic economic growth and business confidence. However, the concurrent deterioration in the terms of trade, marked by falling export prices, serves as a crucial reminder of the inherent volatility in global commodity markets and the challenges of maintaining profitability amidst such shifts.
Moving forward, the market will be closely assessing how New Zealand's exporters navigate this complex environment. While the volume-driven growth is positive, the long-term sustainability will depend on the ability of companies to manage costs, innovate, and secure favorable pricing for their products. The interplay between global commodity prices, the strength of the New Zealand dollar, and domestic economic conditions will dictate the pace and nature of future growth.
Investors should closely watch key indicators such as the Global Dairy Trade auction results, movements in the New Zealand dollar, and future trade balance reports. The performance of major export-oriented companies like Fonterra Co-operative Group Limited (NZX: FCG) and Mainfreight Limited (NZX: MFT) will offer insights into the health of the broader export sector. Furthermore, monitoring government policies aimed at supporting exporters and fostering economic diversification will be essential for understanding the lasting impact and future trajectory of New Zealand's trade landscape.
This content is intended for informational purposes only and is not financial advice