Last year was a turbulent one for small businesses trading overseas. Hindered by global uncertainty around Brexit, ongoing monthly trade deficits and a fluctuating Kiwi dollar, it’s not surprising that New Zealand SMEs felt the effects of rocky trading forecasts.
However, the latest Xero Small Business Insights reveal that after a difficult last quarter, overseas trading is starting to show a slow increase, with the total dollar value of imports rising 1.78% and exports 26.42%, from November to December 2018.
General trading suffered a huge blow in November last year though after a stink bug discovery significantly reduced the country’s imports. Small businesses felt the impact of the discovery too, with the volume of imports plunging from -13.47% to -38.70% from October to November. So, it’s somewhat unsurprising that in December, businesses across the board were generally working to recover from a dire November, leading to what was a weaker month for New Zealand SMEs.
It’s not all bad news, however. Traditionally, exports have been higher than imports over the holiday season, with many small businesses experiencing an increase in overseas demand around the festive break, and this exporting pattern remained the same in December 2018.
As we look at the beginning of 2019, the focus for small businesses is on implementing their strategies to cope with the post-Christmas crunch. Historically, we’ve seen a dip in imports and exports over January and we expect this year to be no different.
With Brexit looming and ongoing discussions underway with China, it will be interesting to see how trade is impacted for small businesses over the coming year. However, as I’ve mentioned previously, the introduction of a GST levy for goods worth $1,000 or less could improve trading for small businesses in the retail and trade sectors.
This article was prepared by Xero using Xero Small Business Insights data, for the purpose of informing and developing policies to promote small business in New Zealand. It contains general information only and should not be taken as taxation, financial, investment or legal advice. Xero recommends that readers always obtain specific and detailed professional advice about any business decisions.