NZ posts worse than expected trade deficit in July

By NZPA

Friday 24th August 2007

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New Zealand posted a worse than expected $791 million trade deficit in July, Statistics New Zealand reported today.

Economists had forecast a $535m shortfall on average.

The trade balance in the year to July was $6.32 billion against a consensus forecast of $6.06b.

The trade balance was the largest on record for a July month, equivalent to almost a third of all exports.

This deficit was the highest proportion of exports for a July month, since 1976.

Exports fell to $2.64 billion from $3.02b in July last year.

Imports also fell -- to $3.43b from $3.71b a year ago.

In July 2006, imports and exports were at record highs for a July month; from those highs imports fell 7.6% while exports fell 12.6%.

Coinciding with the decrease in trade, the Reserve Bank's trade weighted index (TWI) was at a record level in July 2007, up over 20 percent on July 2006.

Commodity groups showing large decreases in trade value in July included aircraft and parts, which was down for both imports and exports, primarily due to high-value aircraft traded in the previous July.

Imports of petrol products also decreased considerably, while the most significant decrease in exports was seen in meat and edible offal.

Showing the largest increase in imports from a year before, vehicles, parts and accessories were up $81m (21.6%) in July 2007, with cars accounting for two-thirds of this increase.

UBS economist Robin Clements said the poor number could put more pressure on the New Zealand dollar given current global conditions and nervous investors.

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