The shortfall shrank to NZ$4.8 billion ($3.9 billion) in the 12 months ended Jan. 31 from NZ$5.31 billion in the year through December, Statistics New Zealand said in Wellington today.
Rising exports may drive New Zealand's economic growth as the central bank keeps interest rates at a record high to curb domestic spending. Overseas shipments, which make up 30 percent of the economy, have been underpinned by rising prices for butter and cheese plus output from the new Tui oil field.
The annual trade gap was the narrowest since the 12 months ended April 2005. Economists expected NZ$4.74 billion, according to the median forecast of 10 analysts in a Bloomberg survey.
New Zealand's dollar bought 81.55 U.S. cents at 11:22 a.m. in Wellington from 81.47 cents immediately before the report, and 81.4 in late Asian trading yesterday.
Economists monitor the rolling, 12-month trade balance because of volatility in the month-on-month figures, which aren't seasonally adjusted. The January trade deficit was NZ$320 million compared with NZ$825 million a year earlier. Economists expected a NZ$268 million gap.
Exports rose 24 percent from a year earlier to NZ$3.08 billion. Economists expected a 28 percent increase. Sales of milk powder, butter and cheese, which make up almost one-fifth of overseas shipments, jumped 51 percent to NZ$861 million in January from a year earlier, the agency said.
Exports of petroleum products increased to NZ$284 million last month from NZ$59 million a year earlier, following the commencement of production at the Tui field in July.
Imports advanced 2.8 percent to NZ$3.4 billion in January from a year earlier buoyed by purchases of mechanical machinery and equipment, vehicle parts and accessories, today's report showed.
Reserve Bank of New Zealand Governor Alan Bollard raised The benchmark interest rate four times last year to a record 8.25 percent to curb consumer spending. Higher borrowing costs may reduce demand for imported computers, cars and mobile telephones.