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Deutsche Bank Research: NZ Merchandise Trade -Sept

Economic Note (New Zealand) NZ: Merchandise Trade - September 1999

Key Points

Provisional data for September recorded a $544m merchandise trade deficit, significantly worse than market expectations for a $300 million deficit. The annual deficit widened to $2,226 million (2.2% of GDP).

The import trend continues to rise, although the rate of growth has slowed slightly in recent months. Within the total, consumer, intermediate and motor vehicle imports have been key drivers of this trend, while the importation of an aircraft and aircraft parts (valued around $290m) has significantly affected the September month.

Comment

Another disappointing trade outturn, with a further sharp deterioration in the merchandise trade balance. While a large part of the widening in the monthly trade deficit reflected the on-off importation of an aircraft, the trend trade balance continued to widen. Import growth has continued to remain very strong in September. In particular, the recent strength appears to reflect continuing strong motor vehicle imports (boosted by tariff cuts and the closure of the NZ car assembly industry) together with some Y2K related investment. More positively, both the Quarterly Survey of Business Opinion and the NBNZ Business Outlook Survey continue to indicate an improvement in export expectations. Moreover, the latest Canterbury Manufacturers Association survey indicates export sales are up significantly on last year's levels. However, the scheduled importation of a naval frigate at the end of the year is expected to delay any recovery in the merchandise trade position until the March quarter 2000.

ENDS

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