New Zealand likely recorded trade surplus in March, but terms of trade to fall around 10 pct in 2016

New Zealand is likely to have recorded a modest trade surplus last month, according to ANZ. The country usually posts trade surplus in March, which is the seasonally high point for the country, due to solid export values. New Zealand is expected to have recorded a surplus of $300 million, quite the same as February’s figure, noted ANZ. New Zealand’s trade accounts have performed quite well in the last six months. In seasonally adjusted terms, the trade accounts continue to be in deficit; however, a deficit of $89 million is modest.

Furthermore, the trend measure at $130 million is the smallest since October 2014. This might appear to be unexpected due to the degree of decline in dairy prices. It indicates quite number of other forces; firstly the oil imports value has declined sharply, consistent with global oil prices, and secondly, NZD non-dairy export prices have remained strong. It is in line with the indication from the wider terms of trade.

However, the trade accounts is likely to return to a declining trend, said ANZ. In the following months, the effect of earlier declines in oil price will start to fade away. This, along with a likely drop in NZD export prices, the terms of trade is expected to decline by around 10% in 2016. This is likely to weigh on the country’s trade performance again, added ANZ.