New Zealand’s balance of trade for November 2025 posted a deficit of NZD -1.54 billion, exceeding the consensus estimate of -0.95 billion and deepening from October’s -1.35 billion. This marks the largest monthly deficit since May 2025, when the surplus peaked at NZD 1.43 billion. The persistent trade shortfall reflects a combination of strong import demand and subdued export growth amid global economic headwinds.

Drivers this month

• Import volumes rose 3.20% MoM, driven by machinery and consumer goods.
• Export receipts contracted 1.10% MoM, pressured by lower dairy and meat shipments.
• Commodity price softness, especially in dairy, weighed on export values.

Policy pulse

The widening deficit adds complexity for the Reserve Bank of New Zealand (RBNZ), which has maintained a hawkish stance amid inflation concerns. The trade gap exerts downward pressure on the NZD, potentially complicating inflation targeting and monetary tightening plans.

Market lens

Immediate reaction: The NZD/USD pair weakened 0.40% within the first hour post-release, reflecting concerns over external imbalances. Two-year government bond yields edged down 5 basis points, signaling cautious investor sentiment.

The balance of trade is a core macroeconomic indicator reflecting the net value of exports minus imports. New Zealand’s persistent trade deficits since August 2025 (-0.58B NZD) highlight structural challenges in external accounts. The current deficit of -1.54B NZD contrasts sharply with the 12-month average surplus of approximately NZD 0.35 billion, underscoring a recent shift in trade dynamics.

Geographic & Temporal Scope

Data sourced from the Sigmanomics database covers monthly trade flows through November 2025. Key trading partners include China, Australia, and the United States, whose demand fluctuations critically impact NZ’s export performance.

Monetary Policy & Financial Conditions

The RBNZ’s official cash rate currently stands at 5.25%, reflecting efforts to tame inflation. However, the expanding trade deficit may pressure the NZD, complicating the transmission of monetary policy and potentially requiring recalibration if currency weakness fuels imported inflation.

Fiscal Policy & Government Budget

Fiscal settings remain moderately expansionary, with government spending supporting domestic demand. This may indirectly boost imports, contributing to the trade deficit. The government’s budget surplus target faces headwinds if external imbalances persist.

Drivers this month

• Machinery imports surged 5.50% MoM, reflecting capital investment.
• Dairy exports dropped 2.30% MoM, pressured by lower global prices.
• Energy imports rose 4.10%, linked to higher crude oil prices.

Policy pulse

The trade deficit’s expansion may delay RBNZ’s plans to pause rate hikes. Currency depreciation risks imported inflation, which could keep the central bank on alert.

Market lens

Immediate reaction: NZD/USD depreciated 0.40%, while 2-year yields declined 5 bps, reflecting risk-off sentiment. The NZX50 index fell 0.70% in early trading.

Looking ahead, New Zealand’s trade balance trajectory hinges on several factors. Commodity prices, global demand, and domestic policy settings will shape outcomes. We outline three scenarios:

Bullish scenario (30% probability)

• Global commodity prices rebound, lifting dairy and meat exports by 5% YoY.
• Import growth moderates as domestic demand cools.
• Trade deficit narrows to NZD -0.80 billion by Q1 2026.

Base scenario (50% probability)

• Exports remain flat amid mixed global signals.
• Imports grow moderately, sustaining a deficit near NZD -1.50 billion.
• NZD remains under pressure but stabilizes around 0.62 USD.

Bearish scenario (20% probability)

• Geopolitical tensions disrupt trade flows, reducing exports 5% YoY.
• Import costs rise due to supply chain disruptions.
• Deficit widens beyond NZD -2 billion, pressuring inflation and monetary policy.

External Shocks & Geopolitical Risks

Heightened tensions in Asia-Pacific and global supply chain volatility remain key risks. Any escalation could further disrupt NZ’s export markets and import costs.

New Zealand’s November 2025 balance of trade deficit signals mounting external pressures amid a complex global backdrop. The widening gap challenges the RBNZ’s inflation targeting and currency stability goals. Fiscal policy’s role in domestic demand also influences import dynamics. Investors and policymakers should monitor commodity prices, geopolitical developments, and domestic demand trends closely. The trade deficit’s trajectory will be a critical barometer for NZ’s macroeconomic health in 2026.

Financial Markets & Sentiment

Market sentiment remains cautious. The NZD’s recent depreciation and bond yield softness reflect concerns over external imbalances and inflation risks. Equity markets have shown sensitivity to trade data, with the NZX50 index down 0.70% post-release.

Structural & Long-Run Trends

Longer-term, New Zealand faces structural trade challenges, including reliance on commodity exports and import dependence for capital goods. Diversification and productivity gains will be essential to improve external balances sustainably.