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NZ posts bigger than expected trade gap on fuel imports

Tuesday 26th August 2008

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New Zealand posted a bigger-than-expected trade deficit last month as imports of fuel outpaced exports of dairy products and crude oil from the Tui field.

The trade gap was NZ$781 million in July from NZ$207 million in June, Statistics New Zealand said in a report. Economists had expected a deficit of NZ$526 million.

The merchandise trade position has been distorted by soaring crude oil shipments, largely from the Tui field part-owned by New Zealand Oil & Gas, while meat exports rose as farmers sent more livestock to be processed amid a summer drought. A slowing domestic economy will probably slow import demand though that will be offset by high fuel prices.

"Over the coming 12 months both dairy and meat exports are likely to remain subdued, but prices are generally strong," said Shamubeel Eaqub, economist at Goldman Sachs JBWere. "The full benefit of an export-led recovery will be visible from late 2009 and in full evidence in 2010," he said.

By Jonathan Underhill

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