The economy of New Zealand grew at the fastest pace in three years in the last quarter of 2012, with demand for forestry exports underpinning gains in the primary sector, the National Business Review reported on 21 March 2013. Source: iNVEZZ
In addition, gains in the forestry sector helped offset declines in other areas such as manufacturing.
The outlook for New Zealand’s forestry sector remains positive mostly due to demand from China, which is likely to provide support for New Zealand forestry investment.
New Zealand’s gross domestic product (GDP) rose 1.5% in the quarter ended December 2012, the strongest quarterly growth since December 2009, according to data released by Statistics New Zealand.
The National Business Review reported that primary industries activity grew 3.2% in the fourth quarter, underpinned by a 9% growth in the forestry sector, and is at the highest level since June 1987.
Manufacturing was the only sector to contract in the fourth quarter, shrinking 0.5% and posting a second consecutive quarter of declines.
Statistics New Zealand also reported that exports of goods, which make up about 30% of the country’s economy, rose 2.1% in the fourth quarter. While dairy exports declined, reflecting a fall in diary production, log exports rose.
Bloomberg quoted data from the New Zealand Forest Owners Association as indicating that the nation’s log exports almost doubled in four years to 12.8 million cubic meters in 2011.
Forestry is reported as being New Zealand’s third largest exporter, behind meat and dairy.
Demand for New Zealand timber, mostly from China, is likely to continue supporting forestry investment in the country.
Figures released by the China Timber & Wood Products Distribution Association showed that New Zealand sold 8.6 million cubic meters of logs to China in 2012, more than tripling its market share to 23% in four years.
“China’s market is so huge that imports are needed for about half of wood consumption,” said Xie Manhua, a researcher at the timber association, as quoted by Bloomberg.
“Therefore, no matter how bleak the housing market could be, the total volume of wood needed would still be big.”
“We’ve got a happy coincidence,” pointed out David Rhodes, chief executive of the Forest Owners Association. “We’ve got China looking to gobble up as much resource as they can and New Zealand is in a happy position of producing an increasing amount in the near term.”
Bloomberg also reported that New Zealand’s Kaingaroa forest was now growing its third crop of trees over 189,000 hectares.
The Kaingaroa forest, first planted in the early 1900s, accounts for just over 10% of plantation forests in New Zealand growing and harvesting trees for commercial sale.
The Kaingaroa forest has become one of the most popular forestry investment destinations in New Zealand, with Canada’s Public Sector Pension Investment fund recently acquiring a stake in the estate. The New Zealand Superannuation fund and the Harvard University endowment fund of also have stakes in the forest.
