New Zealand Trade Deficit Widens

New Zealand’s annual trade deficit unexpectedly widened in June as aircraft purchases bolstered imports to a six-month high. Exports declined.

The shortfall widened to NZ$3.18 billion ($2.1 billion) in the 12 months ended June 30 from a revised NZ$2.97 billion in the year through May, the statistics bureau said in Wellington.

Demand for imports had been slowing as companies cut investment and as the highest unemployment in six years prompted consumers to reduce spending. As domestic demand slows, New Zealand is looking for overseas sales of commodities such as butter, meat and cheese to fuel economic growth.

Economists monitor a rolling, 12-month trade balance for New Zealand because of volatility in the month-on-month figures, which aren’t seasonally adjusted. In June, there was a trade deficit of NZ$417 million compared with NZ$215 million a year earlier.

Imports fell 5.1 percent from a year earlier to NZ$3.62 billion, the statistics agency said. The total included NZ$571 million of aircraft imported by Qantas Airways Ltd. subsidiary Jetstar to start its service in New Zealand.

Excluding the aircraft, imports would have dropped 20 percent from a year earlier, the agency said.

The drop was led by reduced imports of crude oil, gasoline and passenger cars. The monthly figures don’t adjust for prices. The value of oil imports dropped 44 percent as prices slumped 30 percent, today’s report showed.

New Zealand’s economy, which began contracting in the first quarter of last year, shrank 1 percent in the three months ended March 31 and may not begin growing until the fourth quarter of this year, the central bank said on June 11.

Exports fell 11 percent from a year earlier to NZ$3.20 billion, led by crude oil and dairy products, today’s report showed. The decline was the most since July 2007.

Overseas shipments of milk powder, butter and cheese, which make up almost one-fifth of total exports, declined 11 percent. Crude oil exports slumped 60 percent and aluminum shipments almost halved.

Commodity prices fell 28 percent in June from a year earlier, according to an ANZ National Bank Ltd. index.

In the second quarter, exports fell 5.4 percent from the first three months of the year. Imports dropped 8.7 percent excluding aircraft.

Export volumes of dairy products, logs, crude oil and aluminum increased in the quarter, the agency said.

New Zealand Trade Deficit Widens, Bloomberg
7/27/2009 7:30:09 PM