Kiwis milking the tourism boom (as well as cows)

Recent Statistics New Zealand data has confirmed international tourism surged past the dairy sector as New Zealand’s biggest export earner in the year to March 2016.

" Tourist numbers continue to soar while the fortunes of the dairy sector have been more mixed."
Sharon Zollner, Associate Director & Senior Economist, ANZ NZ

Since March, both sectors will have felt the pain of a 5 per cent appreciation in the New Zealand currency as measured by the trade-weighted index.  

However, the tailwinds of the ongoing global tourism boom and an improvement in the global demand/supply balance for dairy products have seen the fortunes of both sectors improve in the past half year.

The running 12-month total of tourist arrivals has lifted another 4 per cent since March, with arrivals hitting a monthly record in September, seasonally adjusted.

Arrivals growth from China has softened a touch (up ‘just’ 5.2 per cent versus a year ago), but growth in visitors from other Asian countries such as Korea (up 67 per cent) and Malaysia (up 89 per cent) remains strong, as does growth from mature markets such as the US (up 32 per cent) and Europe (up 18 per cent).

Meanwhile, whole-milk powder prices at Fonterra’s fortnightly global dairy auction have lifted 60 per cent off their lows in the past six months, more than enough to put the average dairy farmer back in the black if it’s sustained.

On the other hand, early season production in the key Waikato region has been hampered by a very wet spring.

THEY AREN’T HERE TO SEE THE COWS

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Tourism Satellite Accounts released this week confirmed international tourism surged past dairy as New Zealand’s biggest export earner in the year to March 2016.

Tourist numbers have continued to soar since then, while the fortunes of the dairy sector have been more mixed.

Sharon Zollner is an Associate Director & Senior Economist at ANZ NZ