§ We expect higher New Zealand commodity prices and robust demand growth in key trading partners, Australia and China, to support demand for NZD/USD in the near term. These two countries absorb 35% of total New Zealand merchandise exports. As such, we maintain our relatively constructive view on NZD/USD, forecasting 0.82 in 6 months and 0.84 in 12 months.
§ Commodity prices have a significant and direct impact on New Zealand economic growth as commodity exports account for a large share of GDP and producers are largely geographically dispersed and domestically owned farms. Farming-related commodity exports make up around 50% of total merchandise exports, with dairy exports alone accounting for half, or 6.3% of GDP.
§ In the long run, the NZD is a likely beneficiary of the ongoing urbanisation and growth rebalancing in China and rapid demand growth in India. Growing populations and rising per capita income are likely to support demand for high-quality food products, including dairy, beef and lamb, as consumer demand moves up the value chain.
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Barclays Capital