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NZ: Overseas Merchandise Trade (April, Final)

Data Flash (New Zealand)

Key Points

A merchandise trade surplus of $365m was recorded in April. A provisional surplus of $391m had been reported on 25 May. The average surplus for April over the past 10 years is $193m.

The trade deficit for the year to April was $664m, $22m higher than previously reported.

The value of exports for the three months to April was 16.2% higher than a year earlier. Allowing for price movements, today's outcome is consistent with annual growth in export volumes of around 2%.

The value of imports was unchanged from the estimate published on 25 May. The estimated level of imports for the three months to April was 5.3% higher than a year earlier. Excluding `lumpy' imports of capital transport and military equipment, `core' imports for the 3 months to April were 7% higher than a year earlier. Allowing for price movements, core import volumes remain very subdued, showing little if any growth.

Commentary The new information in today's release was the composition of export growth during April (previously only aggregate data had been made available). While the aggregate outcome was in line with our expectations, the composition of growth was more heavily weighted towards the primary goods sector than we had anticipated. Dairy exports were close to 80% higher in value than a year earlier while meat exports rose 21%. However, as the table below shows, exports in several parts of the manufacturing sector declined compared with a year earlier - a poor result given that export values are likely to have been boosted somewhat by the weak NZD. This weakness could simply reflect the usual volatility in monthly data (especially during a holiday-affected month such as April). However, it could be symptomatic of the impact of the weak global economy. We'll reserve our judgement until next month. The improving trend in the annual current account deficit remains intact. We expect the annual current account balance to decline to around 4.7% of GDP in Q1 2001 and to around 4% of GDP during the second half of 2001. Thereafter, the prospects for further improvement will depend on the shape of the recovery in the economies of New Zealand's major trading partners (especially the US and Australia), the extent to which New Zealand producers can gain market share (assisted by the weak NZD) and the degree to which drought conditions continue over coming months (with consequent risks for agricultural production later in the year).

Next Trade Release: May Provisional (28 June). Preliminary Estimate: +$310m

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