Ongoing export boom highlights just how broken the economy is – Liam Dann

On that basis, it is hard to see how tearing up the Coromandel or West Coast to boost mining exports is going to solve New Zealand’s problems.

I’m not opposed to boosting exports. I’ve been cheering on the sector for decades.

I’m even open to the idea that New Zealand might have valuable, rare-earth minerals worth mining if we can do it cleverly.

I’ll always be enthusiastic about adding value to exports and creating high-skilled, high-salary local jobs.

But if we can’t manage sustainable economic growth with the booming export sector we already have, then what is the point of endlessly boosting the raw volume of primary sector commodities?

There was intense focus on unemployment data the past week.

The topline figure rose to 5.4%, despite hopes that it might have peaked.

That’s not great. But as economists were quick to point out, it wasn’t as bad as it looked at first glance.

If we take a step back and look at the data in context, we see that there was actually some employment growth for the first time in 18 months.

It’s just that the number of people participating in the labour force grew by more than the number of jobs created.

So sure, in the context of the painfully slow economic recovery we expect to take hold this year, there were some bright spots.

But how about we take another step back?

Let’s look at our miserable track record through what has been a remarkable period of growth for New Zealand export earnings.

The first quarter of employment growth was 18 months. That’s not much to cheer about.

If you jumped in a time machine and shared that with a Kiwi economist from any time in the 20th century, they would assume we must have been going through a horrible commodity price crash.

Or that the grim predictions of the 1980s and 90s about the ever-dwindling value of food commodity exports had come true.

But no, the opposite has been the case.

Total exports were valued at $80.7 billion in the year ended December 2025, according to figures released by Stats NZ January 29.

It was the first time we’ve ever earned more than $80b.

The nominal value of New Zealand’s goods exports has more than doubled in the past 20 years.

Okay, that’s more like a 33% rise if we inflation-adjust the figure.

But are we 33% richer in real terms than we were in 2006?

It doesn’t feel like it.

The boom times for exports look set to roll on.

Dairy prices, which threatened to come back down to earth late last year, have taken off again.

The latest Global Dairy Trade auction saw a big spike in prices across the board.

The global butter price was up 8.8%. It’s risen 15% since mid-December ... so my advice is stock up on the stuff now – retail prices are about to take off again.

It is getting late in the dairying season now and New Zealand production is past its peak.

But all this wet weather has production volumes running about 3% ahead of last year.

So the total export receipts will be bolstered by price and volume.

The ANZ Commodity Price Index for January, out last week, showed beef and lamb still at historic highs.

Even wool is up 37% in the past year.

I’m working on gut feel a bit here now. But in decades gone by, the correlation between export booms and GDP growth was very strong in this country.

Something seems to have changed.

All this good export news is a reminder that this country doesn’t have a problem earning its way in the world.

But clearly, given the miserable state of the economy over the past few years, we do have a problem.

We live beyond our means. That’s not just a problem of government deficits.

The total value of goods imports has consistently stayed ahead of the value of goods exports, despite the strong growth.

We’re awash with imported stuff we probably don’t need and which certainly isn’t generating any long-term wealth.

There are other obvious structural issues. There is the issue of how much we save and where we invest.

We inflated our housing prices to record levels, generating record profits for banks, which we sold off offshore.

The farming sector became highly leveraged and we’re told that much of the first blush of agricultural commodity boom money has been used to pay down that debt.

That’s good news. But even when the debt is dealt with, it’s not clear how the export money is flowing through the economy.

There has been consolidation and corporatisation of farms in the past two decades, which presumably sees a much higher percentage of export earnings heading back offshore as dividends for private investors.

There are no easy answers to all this.

These are all the things that commentators like me say all the time.

We need to save more and invest smarter. We need to grow our financial sector and boost service-sector exports.

We need to boost productivity across the board with smarter regulation, improved infrastructure and by focusing on training, lifting more Kiwis out of the poverty trap.

The current Government is talking a good game about all this, but then so did the last one.

To come back to my original point, we earn enough money from exports to qualify as a wealthy nation.

Lifting export returns is something we should always aspire to.

But just pouring more fuel – or even higher-octane fuel – into a broken and inefficient engine will continue to deliver diminished returns.

Liam Dann is business editor-at-large for the NZ Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.

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