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Overseas Merchandise Trade - March 2000

Data Flash (New Zealand)

Overseas Merchandise Trade - March 2000

Key Points

Revised data pointed to a trade surplus of $21m for the month of March compared to the provisional estimate of a $38m deficit. The annual deficit now stands at $3.4bn.

The upward revision reflected higher than previously estimated export receipts. Provisional import receipts were unchanged from the value reported on 1 May.

Export values in March were 14.4% higher than the same month last year.

For Q1 as a whole, export values were up 5.9% qoq (s.a.).

The contribution of exports of non-food manufactured goods to overall export growth appears to be increasing. Statistics NZ estimate that exports in this sector rose 12.7% qoq (s.a.) in Q1 following growth of 4.8% qoq (s.a.) in Q4.

Exports to Asia and the Asean countries are running in excess of 20% higher than the same month last year. Exports to the US during March 2000 were up 8% on March 1999. For the quarter as a whole, exports to the US during Q1/2000 were up 32% on Q1/1999.

As previously noted, import values in March were 18.6% higher than the same month last year. The increase was spread throughout most of the main economic categories.

Commentary

The upward revision to export values and, in particular, increasing signs of stronger export growth in the manufactured sector, provides tentative evidence to suggest that growth in international demand, higher commodity prices and the weak NZD are beginning to impact on export returns in a more substantial way than hitherto has been the case.

The split between growth in volumes and prices will not be known until the Overseas Trade Indexes for Q1 are published in June. We estimate that around 2% of the 5.9% (s.a.) growth in export values during Q1 is due to higher prices, suggesting that volumes have risen by a little under 4%.

We expect the current account deficit to fall marginally to 7.7% of GDP in Q1/2000, compared with 8.0% of GDP in Q4/1999. Thereafter we forecast a marked turnaround in the trade balance to lead to a gradual improvement in the current account deficit. We expect the deficit to narrow to around 6% of GDP by Q4/2001.

Darren Gibbs, Senior Economist, New Zealand

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