N.Z. Trade Deficit Widens

New Zealand’s annual trade deficit widened in October as higher oil shipments pushed imports to a record, outpacing a gain in exports.

The gap widened to NZ$5.22 billion ($2.9 billion) in the 12 months ended Oct. 31 from NZ$5.05 billion in the year through September, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg survey of eight analysts was for a NZ$5.21 billion shortfall.

The annual trade gap is the widest this year and the deficit may expand further as a recession in the world’s major economies slashes commodity prices and curbs demand for exports. Prices of butter, meat and other export commodities dropped 7.4 percent from September, the most in 21 years, according to an index compiled by ANZ National Bank Ltd.

The U.S., Japanese, U.K. and euro-area economies will all shrink next year, the Organization for Economic Cooperation and Development said this week.

Eaqub expects the economies of New Zealand’s major trading partners to grow 2.2 percent this year and just 0.5 percent in 2009, which will weigh on commodity prices.

Still, the New Zealand’s dollar’s 30 percent fall against the U.S. currency the past six months will provide some support for exporters, he said.

Import growth may also slow amid a domestic recession, which is likely to curb demand for cars, consumer goods and business equipment, Eaqub said.

In October, imports rose 15 percent from a year earlier to a record NZ$4.78 billion, the statistics agency said.

The figures aren’t adjusted for inflation and reflect higher prices for imports as well as actual shipments. Crude oil imports almost doubled as prices increased from a year earlier and the volume delivered increased 40 percent, the statistics agency said.

Purchases of electrical machinery, toys and sporting equipment rose from a year earlier, the agency said. Car imports slumped 19 percent and capital equipment imports also slumped.

Exports rose 14 percent in October from a year earlier to NZ$3.83 billion. The trend in export growth is slowing, the statistics agency said. The annual increase averaged about 30 percent in the three months ended August.

Sales of milk powder, butter and cheese, which make up almost one-fifth of overseas shipments, rose 14 percent in October from a year earlier. Meat, log and seafood shipments also increased.

Economists monitor the rolling, 12-month trade balance because of volatility in the month-on-month figures, which aren’t seasonally adjusted. In October, there was a NZ$942 million trade deficit compared with an NZ$774 million gap a year earlier. Economists expected a NZ$1 billion deficit.

N.Z. Trade Deficit Widens

TradingEconomics.com, Bloomberg.com
11/26/2008 3:19:59 PM