New Zealand posts larger-than-expected trade deficit in July, modest deterioration to continue over the next year

Statistics New Zealand reported on Wednesday that the country’s trade balance swung into a deficit of NZ$433 million in July from a surplus of NZ$127 million the previous month. Analysts had expected the trade balance to fall into a deficit of NZ$350 million last month.

Details of the report showed that a one-off import (valued at $258m) boosted import values and excluding this, the trade deficit was $175m in the month. In seasonally adjusted terms, the trade deficit widened to $218m, the widest since March.

Seasonally adjusted export values rose 2.2 percent m/m in July. Seasonally adjusted import values rose 5.6 percent m/m after falling for the previous 2 months.

"We still believe the trade balance will deteriorate modestly over the next year or so. But with export prices stabilising (and some rising) and oil prices expected to remain in a broad $40-$50/bbl range, that deterioration now looks set to be far smaller than seemed likely a few months ago," said ANZ Research in a report.