New Zealand Annual Trade Gap Narrows as Exports Rise

By Tracy Withers

April 29 (Bloomberg) -- New Zealand’s annual trade deficit narrowed in March as rising commodity prices and the sale of an aircraft bolstered exports to a record.

The gap narrowed to NZ$4.8 billion ($2.7 billion) in the 12 months ended March 31 from NZ$5.16 billion in the year through February, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg News survey of 10 analysts was for a NZ$4.89 billion shortfall.

World prices of butter, meat and other commodities rose for the first time in eight months in March, buoying exports that make up 30 percent of the New Zealand economy. The annual deficit may narrow further as a domestic recession curbs demand for imports. Finance Minister Bill English said last week the economy is probably in its sixth quarter of contraction.

“There were some positive signs for agricultural exports,” said Philip Borkin, an economist at ANZ National Bank Ltd. in Wellington. “The economy is definitely rebalancing as imports come under pressure. We think we have seen the peak in the current-account deficit.”

New Zealand’s dollar bought 56.10 U.S. cents at 11:40 a.m. in Wellington from 55.82 cents immediately before the report was released.

The current-account deficit, the broadest measure of trade because it includes investment and tourism, was a record NZ$16.07 billion, or 8.9 percent of gross domestic product in the year ended Dec. 31. ANZ expects the gap will narrow to 5.8 percent of GDP by the end of 2009.

Monthly Gap

Economists monitor the rolling, 12-month trade balance because of volatility in the month-on-month figures, which aren’t seasonally adjusted. In March, there was a trade surplus of NZ$324 million compared with a NZ$43 million deficit a year earlier.

Exports rose 18 percent from a year earlier to NZ$4.04 billion, led by the NZ$128 million sale of an aircraft and gains in beef, lamb and apple prices, the statistics agency said. The kiwifruit export season also began earlier than usual.

Commodity prices rose 1 percent in March from February, according to an index compiled by ANZ National Bank Ltd.

Sales of milk powder, butter and cheese, which make up almost one-fifth of overseas shipments, gained 4.5 percent. Crude oil and aluminum exports declined.

Imports jumped 6.9 percent to NZ$3.72 billion led by electrical machinery, particularly for wind farms, the agency said. Vehicle and fuel imports fell.

Crude oil imports dropped 49 percent from a year earlier. The import and export figures aren’t adjusted for inflation and reflect changing commodity prices as well as actual shipments. Crude oil imports fell by a third to 284,000 tons from a year earlier. Prices declined 20 percent.

Imports recovered from a three-year low in February. Still, first-quarter imports slumped 13 percent from the fourth quarter, the statistics agency said.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.