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NZ trade deficit smaller than expected in October on rising exports

Thursday 24th November 2011

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New Zealand’s trade deficit was smaller than expected in October as exporters shipped more crude oil and meat.

The deficit of $282 million in October was almost half the $450 million shortfall expected by a Reuters survey of economists, but wider than the deficit of $220 million in the same month last year, according to Statistics New Zealand. The annual surplus of $627 million was about half the $1.26 billion annual surplus in October 2010.

“While there have been signs the upward trend in exports has plateaued in recent months, the trend measure in exports remains at record-high levels,” said Christina Leung, economist at ASB. “We expect continued demand for our core commodity exports will support exports at these high levels over the coming months.”

New Zealand’s foreign trade has come under increasing pressure in recent month as the threat to the global economy from Europe’s heavily indebted nations and America’s inability to reign in the Federal budget keeps investors nervous and consumers unwilling to ramp up spending.

Philip Borkin, economist at Goldman Sachs New Zealand, said today’s data shows things are doing reasonably well due to the growing exposure to growing Asian markets and the dominance of primary products in the nation’s exports.

"Developed economies are still important and are important for our trading partners,” Borkin said. “The direct impact (of a global slowdown) may be smaller, but the indirect impact is still there.”

The value of exports rose 5.3 percent to $3.88 billion in October from a year ago, beating economists’ expected $3.78 billion.

Meat and edible offal sales led the gains, climbing 22 percent to $296 million compared to October 2010. Crude oil exports gained 37 percent to $280 million, while foreign wool sales surged 43 percent to $90 million.

Milk powder, butter and cheese volumes fell 6.8 percent to 175,000 tonnes in October compared to the same month a year ago.

Annual exports rose 11 percent to $46.99 billion, led by a 16 percent increase in foreign sales of milk powder, butter and cheese to $11.39 billion. Along with $736 million of casein and caseinates sales, dairy products account for about 26 percent of the nation’s exports.

The value of imports rose 6.6 percent to $4.16 billion from a year ago, with an 11 percent increase in petroleum goods to $623 million in October, and a 12 percent lift in purchases of foreign mechanical machinery and equipment to $518 million.

The value of annual imports rose 12 percent to $46.36 billion, with petroleum products making up about 16 percent of all imports.


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