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NZ annual trade gap widens as oil import costs soar

Jane Shanahan

Friday 27th June 2008

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New Zealand's annual trade deficit widened in May as the soaring cost of oil imports outstripped an increase in the value of dairy and petroleum exports.

The deficit was NZ$4.81 billion in the 12 months ended May 31, Statistics New Zealand said in a report. The trade deficit for the month of May was NZ$196 million, the highest recorded for that month in the past 10 years.

Imports of petroleum products surged 18% in the 12 months to May to NZ$6.74 billion, making them the biggest single contributor to the total value of inbound shipments.

The price of crude oil rose above US$140 a barrel for the first time yesterday, driving up costs for consumers and companies. The central bank, which has kept its benchmark interest rate at a record high 8.25%, predicts inflation will accelerate to a 4.8% rate in the third quarter.

The trade report comes after figures this week showed New Zealand's current account deficit was 7.8% of gross domestic product in the first quarter, more than economists had expected.

Mechanical machinery imports were the second-biggest by value in the latest 12 months, rising 12% to NZ$5.85 billion, while vehicles, parts and accessories were up 10% to NZ$5.32 billion.

Exports of dairy products rose 31% to NZ$8.53 billion, reflecting record world prices for milk. Shipments of crude oil produced in New Zealand soared 414% including output from the Tui field. Meat exports fell 2.6% to NZ$4.58 billion.

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