New Zealand Trade Deficit Widened


New Zealand's annual trade deficit unexpectedly widened in March as export growth was the weakest in eight months, adding to signs the economy may have stalled in the first quarter.

The shortfall rose to NZ$4.53 billion ($3.6 billion) in the 12 months ended March 31 from NZ$4.42 billion in the year through February, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg survey of 12 analysts was for a NZ$4.08 billion gap.

Overseas shipments, which make up 30 percent of the $105 billion economy, rose at a sixth of the pace economists expected amid falling world commodity prices, while a drought forced some farmers to stop milking cows and send livestock to slaughter. Falling farm production and weaker exports may slow the nation's economic growth to a 10-year low in 2008, economists estimate.

New Zealand's dollar fell to as low as 78.14 U.S. cents from 78.54 cents immediately before the report. It bought 78.24 cents at 5:05 p.m. in Wellington trading.

Business confidence tumbled to the weakest level in 17 years and house sales fell to a seven-year low in March.

Earlier this month, the Treasury department forecast farm production would be 1 percent less this year than in 2007 because of the drought. The Waikato region, which has the highest number of dairy farms in the country, is suffering the most severe drought in 20 years, Treasury said on April 7.

Exports rose just 3.7 percent from a year earlier to NZ$3.44 billion. That's the slowest annual growth since exports fell in August. Economists forecast a 23 percent increase.

Sales of milk powder, butter and cheese, which make up almost one-fifth of overseas shipments, jumped 27 percent to NZ$771 million in March from a year earlier, the agency said.

Exports of petroleum products increased to NZ$130 million last month from NZ$31 million a year earlier, following the commencement of production at the Tui field in July. Still, oil exports were an eight-month low, the agency said

Excluding dairy and oil, exports fell 5.2 percent, the statistics agency said. Meat, log, lumber, seafood and aluminum sales declined.

Prices for commodities that make up 70 percent of total overseas shipments have been rising at a slower pace. Dairy prices have fallen 5.6 percent from a peak in November, according to an index compiled by ANZ National Bank Ltd.

Imports rose 7.1 percent to NZ$3.49 billion in March from a year earlier, buoyed by purchases of crude oil and jet fuel, today's report showed. Economists expected a 12 percent gain.

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 and inflation.

Higher borrowing costs have cut demand for imported computers and mobile telephones. Imports of consumer goods fell 8.2 percent in March from a year earlier.

Oil imports soared 82 percent to a record as prices rose and the quantity purchased jumped 45 percent from a year earlier, the agency said.

Economists monitor the rolling, 12-month trade balance because of volatility in the month-on-month figures, which aren't seasonally adjusted. In March, there was a NZ$50 million trade deficit compared with a NZ$60 million surplus a year earlier. Economists expected a NZ$395 million surplus.

 


TradingEconomics.com, Bloomberg
4/29/2008 6:37:47 AM