NZ posts first annual trade surplus since 2002 as exports fall less than imports

Thursday 27th May 2010

New Zealand recorded its first annual trade surplus since 2002 last month as the impact of recession caused the value of imports to drop by twice as much as exports.

The surplus was $161 million in the 12 months ended April 30, from a deficit of $172 million in the year through March, according to Statistics New Zealand. For the month of April, the surplus was a better-than-expected $656 million, up from $590 million in March. A surplus of $455 million had been expected, according to a Reuters survey.

New Zealand came through the global financial crisis relatively unscathed as demand from its biggest market, Australia, was underpinned by that country’s sales of raw materials into China, which is also the No. 2 buyer of kiwi goods. Shipments to Australia rose 8.9% to $747 million last month, to be down 5.3% in the year, and exports to China soared 44% in April to $460 million and jumped 28% in the year. More robust exports and weaker imports provide some optimism that the economy is rebalancing away from domestic consumption toward the tradable sector.

“The first annual trade surplus in nearly five years is the most visual sign of the rebalancing the economy has been undertaking,” said Philip Borkin, economist at Goldman Sachs JBWere. The improved trade position lifts the prospects that the current account deficit, forecast to hold at around 7% of GDP in coming years, “will be able to be maintained at a more sustainable level.”

The New Zealand dollar rose to 66.68 US cents after the figures from 66.52 cents immediately before the figures were released. The trade-weighted index, or TWI, climbed to 65.21 from 65.08.

Borkin said the latest annual surplus shows a more resilient trade position than the last one in July 2002, reflecting stronger commodity prices and demand from emerging markets including China, because the 2002 surplus occurred when the kiwi dollar was below 50 US cents.

Total exports rose 9% to $3.97 billion last month, paced by a 29% jump in dairy products, a 12% gain in meat and a 34% increase in logs and wood products. Exports in the 12 months through April slipped 7.6% to $39.9 billion.

Imports declined 0.2% in April from the same months of 2009 to $3.3 billion, reflecting a 19% decline in crude oil and fuel to $505 million and a 16% fall in electrical machinery to $266 million. In the 12 months, imports fell 16% to $39.7 million, again led by a drop for oil and fuel.

Imports were lifted by the importation of the HMNZS Otago offshore patrol vessel.

Businesswire.co.nz

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