Larger than Average January Trade Deficit

Larger than Average January Trade Deficit

The provisional value of merchandise imports for January 2004 is $2,591 million, 8.3 percent higher than January 2003, according to Statistics New Zealand. The estimated value of merchandise exports for January 2004 is $2,020 million, resulting in an estimated trade deficit of $571 million or 28.3 percent of exports. This is the largest January trade deficit as a percentage of exports since January 1986, when 51.0 percent was recorded. The average trade deficit for the past 10 January months was 5.3 percent of exports.

The main contributors to the higher value of imports for January 2004, when compared with January 2003, were aircraft, vehicles, and electrical machinery and equipment. In January 2004, several aircraft and 19 armoured motor vehicles were imported, valued at over $250 million in total. With these excluded, the value of imports for January 2004 would have been 2.6 percent lower, when compared with January 2003, and the trade deficit would have been 15.3 percent of exports.

Lower values and quantities of imported crude oil were recorded in January 2004, when compared with January 2003. Crude oil and petroleum products are imported at irregular intervals and usually consist of large shipments, which can cause fluctuations in the value of imports from month to month.

While the exports trend is rising, the imports trend is rising at a faster rate, causing the trade deficit to widen. The value of the New Zealand dollar, as measured by the trade weighted index, has been appreciating since November 2000 and has appreciated sharply over the past four months, gaining 6.8 percent. A higher exchange rate generally has a downward influence on import prices and may lead to an increase in quantities of imported commodities.

The provisional value of imports for the year ended January 2004 was $31,979 million, down $227 million or 0.7 percent, when compared with the year ended January 2003. The estimated trade deficit for the year ended January 2004 was $3,622 million or 12.8 percent of exports. Detailed exports statistics will be released on 9 March 2004.

Brian Pink

Government Statistician

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