NZ annual trade gap widens as oil import costs soar

Jane Shanahan

Friday 27th June 2008

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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