New Zealand Trade Deficit Narrows

New Zealand posted its smallest annual trade deficit in more than six years in September as imports slumped for a sixth month.

The shortfall narrowed to NZ$1.53 billion ($1.1 billion) in the 12 months ended Sept. 30 from a revised NZ$2.36 billion in the year through August, the statistics bureau said. The gap was the narrowest since January 2003.

The trade deficit has narrowed to less than a third of its size at the start of the year as the nation’s worst recession in three decades curbed demand for imports. Purchases of imported cars and computers rise may next year as the economy recovers while exports are being curbed by a stronger currency, adding to signs the deficit may begin widening.

Third-quarter imports fell 8.1 percent from the second quarter and are near a four-year low. Exports dropped 6.8 percent from the second quarter, the third straight decline.

Economists monitor a rolling, 12-month trade balance for New Zealand because of volatility in the month-on-month figures, which aren’t seasonally adjusted. In September, there was a trade deficit of NZ$424 million. Economists expected a NZ$681 million gap.

Imports in September posted their sixth straight decline from a year earlier, falling 27 percent to NZ$3.25 billion, the statistics agency said. The drop was led by purchases of fuel, cars, machinery and fertilizer.

The monthly figures don’t adjust for prices. The value of oil imports dropped 43 percent from a year earlier after prices fell 49 percent.

Imports declined after the economy slumped into a recession in the first quarter of last year, curbing demand for cars and computers. The economy unexpectedly grew 0.1 percent in the second quarter of this year and economists say a gradual recovery in the second half of 2009 will stoke imports.

Exports in September fell 11 percent from a year earlier to NZ$2.83 billion, led by dairy products and aluminum, today’s report showed. Logs and crude oil exports increased.

Overseas shipments of milk powder, butter and cheese, which make up almost one-fifth of total exports, slumped 18 percent because of weaker returns. The quantities of dairy shipments increased 56 percent, the agency said.

Exports earnings are falling because the New Zealand dollar’s gains are more than offsetting rising world prices of meat, wool and aluminum. The currency has increased 27 percent against the U.S. dollar in the past six months.

Since February, prices of commodity exports in world markets have risen 20 percent, according to an index calculated by ANZ National Bank Ltd. Once translated into New Zealand dollars, prices have slumped 10 percent.

New Zealand Trade Deficit Narrows, Bloomberg
10/29/2009 10:12:35 AM