NZ Annual Trade Gap Widens On Oil Imports
NZ Annual Trade Gap Widens On Oil Imports; Exports Gain
Nov. 27 –New Zealand’s annual trade deficit widened last month as crude oil shipments drove up imports, outpacing a gain in exports of dairy products, meat and logs.
The deficit widened to NZ$5.22 billion in the year ended Oct. 31, from NZ$5.05 billion in the 12 months to Sept. 30, according to Statistics New Zealand. In the month of October, the deficit narrowed to NZ$942 million from NZ$1.26 billion in the previous month.
New Zealand’s exports are dominated by agricultural products whose prices are sinking as the global economy slumps. The impact of sliding prices is being offset by a weakening New Zealand dollar, though prospects are for the trade gap to worsen, economists say. Prices of export commodities fell 7.4% last month, the biggest slump in two decades, according to ANZ National Bank.
“The underlying trade deficit trend continues to worsen and the outlook is uncertain given the downside risk to exports from a global recession, and the downside risks to imports from a local recession” said Shamubeel Eaqub, economist at Goldman Sachs JBWere.
Imports rose 15% to a record NZ$4.78 billion in October from the same month last year. The pace of growth is likely to slow as the economy’s downturn continues, Eaqub said. Exports rose 14% to NZ$3.83 billion.
The economy contracted in the first half of the year, the first recession since 1998, and may have continued shrinking through the fourth quarter. The central bank slashed the official cash rate by 100 basis points to 6.5% last month and economists predict it will make another cut of the same size on Dec. 4.