As November arrives, preliminary trade data for the first three quarters of 2025 provides important signals about economic health across the Tasman. The patterns emerging from both Australia and New Zealand reveal structural shifts that will shape 2026 planning for businesses and policymakers.

Australia’s Trade Position

Australia’s trade surplus for the first nine months of 2025 reached $87.4 billion, down from $102.1 billion in the same period of 2024. This decline reflects weakening commodity prices rather than volume reductions, with iron ore and coal exports maintaining volume but facing 12-15% price deterioration year-on-year.

The services trade deficit widened to $24.6 billion, driven primarily by increased international travel and education services imports as borders remained fully open post-pandemic. The education services export recovery continued but remained 8% below 2019 levels in volume terms, despite higher fee structures.

Manufacturing imports grew 6.8% year-on-year, reflecting continued domestic demand strength despite interest rate pressure. This pattern suggests consumer spending resilience, though the composition shifted toward necessities and away from discretionary categories.

New Zealand’s Export Challenges

New Zealand’s trade deficit for the first nine months reached NZ$14.2 billion, significantly wider than 2024’s NZ$9.8 billion. The deterioration reflects both weaker export performance and sustained import demand.

Dairy exports faced multiple headwinds. Volume to China, still New Zealand’s largest dairy market, declined 7% as Chinese domestic production increased and consumer demand softened. Prices for whole milk powder averaged USD $3,180 per tonne versus USD $3,520 in 2024, compressing export values despite relatively stable volumes to other markets.

Forestry exports continued multi-year decline patterns, down 18% year-on-year, as Chinese construction sector weakness persisted. This sector now represents less than 4% of total exports versus 7% five years ago, marking a significant structural shift.

Currency Impact Analysis

The AUD averaged USD 0.66 for the first nine months of 2025, providing some competitiveness support for Australian exporters even as it complicated import cost management. The NZD averaged USD 0.60, weaker than many forecasters expected, which should theoretically support exports but failed to offset volume and price challenges.

The NZD/AUD cross rate averaged 0.91, relatively stable compared to historical volatility. This stability reduced cross-Tasman arbitrage opportunities but provided planning certainty for businesses operating in both markets.

Sector Performance Highlights

Australian LNG exports continued strong volume performance at 82.4 million tonnes for the nine months, though price realization weakened. The sector remains critical to the trade balance, though increasing competition from US and Qatari projects creates medium-term pricing pressure.

New Zealand’s meat exports showed resilience, growing 4% in value terms as diversification away from traditional UK markets toward Asian destinations continued. This sector demonstrated better adaptability than dairy to changing global demand patterns.

Australian wine exports faced ongoing challenges in the Chinese market despite the removal of formal tariffs, with volumes still 60% below pre-tariff levels. Alternative markets in the US and UK absorbed some volume but at lower price points.

Digital Services Evolution

Both countries showed growth in digital services exports, though measurement challenges make precise quantification difficult. Software development, digital marketing services, and creative content exports all trended positively. As one AI consultancy working with exporters noted, businesses that invested in digital capabilities recovered export momentum faster than traditional operators.

This sector’s growth partially offsets traditional export challenges but remains small relative to goods trade. Australia’s digital services exports reached approximately $8.2 billion for the nine months, while New Zealand’s totaled roughly NZ$2.1 billion.

Import Dependency Patterns

Both countries demonstrated continued import dependency for manufactured goods, particularly electronics, machinery, and vehicles. Australian manufacturing import penetration reached 86% for finished goods, while New Zealand’s exceeded 92%.

This dependency creates vulnerability to supply chain disruption and currency fluctuation but reflects economic reality given both countries’ small manufacturing bases and high labor costs. Few sectors show realistic import substitution opportunities in the medium term.

Q4 Outlook Implications

The final quarter typically shows seasonal strength in agricultural exports and elevated consumer goods imports ahead of Christmas. The 2025 pattern appears likely to follow this norm, though consumer spending uncertainty may moderate import growth.

Chinese economic stimulus announcements in late September created brief optimism for Australian commodity exporters, but tangible demand improvement remained limited through October. The sustainability of any Chinese demand recovery will significantly influence Q4 and 2026 trade patterns.

New Zealand’s agricultural export season faces continued headwinds from elevated inventory levels in key markets and persistent consumer demand weakness in China. The diversification toward alternative Asian markets continues but cannot fully offset Chinese market challenges given the scale differential.

Strategic Considerations

The trade data underscores both countries’ continued commodity export dependency and the challenges this creates in a period of moderating global demand growth. Diversification efforts show progress but require sustained commitment over years rather than months.

For businesses, the data suggests continued currency volatility, persistent margin pressure in export sectors, and the need for operational efficiency improvement. The companies performing best in this environment combine cost discipline with market diversification and product innovation.

The final quarter’s data will provide important signals for 2026 planning, particularly regarding consumer demand sustainability and the effectiveness of Chinese stimulus measures in supporting commodity demand.