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NZ posts smaller-than-expected trade surplus on weaker exports, oil imports

Friday 26th March 2010

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New Zealand posted a smaller-than-expected trade surplus last month as exports weakened and imports were boosted by shipments of crude oil.

The trade surplus was $321 million in February, up from $263 million in January, according to Statistics New Zealand. Economists had expected a surplus of $480 million, according to a Reuters survey. Imports were $2.9 million, up 1.3% from the same month of 2009, while exports fell 3.6% to $3.3 billion.

Figures this week showed the nation’s current account deficit shrank to $5.5 billion, or 2.9% of gross domestic product last year, the smallest gap since 2001, though this partly reflected weaker imports in an economy emerging from recession. There’s scope for the deficit to widen again this year as the economy picks up pace and demand for imports rises.  

“The actual trade results were another warning shot of a slower GDP recovery” in the first quarter, and “stalling improvement” in the current account deficit, Craig Ebert, economist at Bank of New Zealand, said in a note.

The economy expanded 0.8% in the fourth quarter, the fastest pace in two years, according to government figures this week, and the central bank is forecasting a 0.9% pace for the first quarter of 2010. Ebert estimates the economy slowed to a 0.4% pace in the first quarter.

The annual deficit widened to $347 million from, after narrowing to $186 million in January.

"We expect the annual deficit will continue to widen as the economic recovery, particularly in consumer spending and investment, lifts imports over 2010,” said Jane Turner, economist at ASB.

The kiwi dollar traded at 70.42 US cents from 70.33 cents immediately before the report. The currency bought 77.58 Australian cents from 77.50 cents.

Exports to Australia, the biggest market for New Zealand goods, were $751 million in February, up 7% from a year earlier. Exports to China jumped about 16% to $337 million, while shipments to the US dropped 31% to $302. Exports to Europe dropped 25% to $460 million.

The export figures underline the relative performance of the regions. With economies in Asia, ex-Japan, generally faring better through the global slowdown the Europe and the US.

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