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New Zealand’s trade deficit widens in September, trade balance may improve slightly this year
New Zealand’s trade deficit for September widened more than expectations in September. The nation’s trade balance recorded a deficit of NZD 1,436 million. But it included a large one-off capital item of NZD 248 million. Excluding this, the deficit was consistent with the expectations. Seasonally, New Zealand usually records a huge deficit during this time of the year because of low primary sector export volumes after winter.
Seasonally adjusted, the deficit was quite decent at NZD 628 million. On an annual basis, it came in at NZD 3,404 million. The annual deficit is smaller than experienced form the late 2015 through the first half of 2016. But seasonally adjusted deficit continues to be one of the largest in recent years, while the annual deficit has been on a broadening path since July, noted ANZ.
Export values, on a seasonally adjusted basis, rose 1.2 percent sequentially. Exports related to livestock continued to disappoint in spite of the rebound in dairy prices. This is partially because of the forward selling of product on GDT being lagged in the trade statistics. But the statistics also indicate signs of lower dairy and meat supply. On the other hand, other sectors such as horticulture and forestry continue to rebound with strong export receipt gains in recent months.
Meanwhile, seasonally adjusted imports rose 6 percent sequentially. Petroleum imports rebounded largely with a rise of 37 percent, while passenger vehicle imports rose 19 percent. Imports of consumption goods were quite contained in September, implying that consumers are showing reasonable restraint apart from the odd big ticket item, such as a new/upgraded vehicle, said ANZ.
At present, the lower volumes in livestock sectors are being countered by increased volumes for other industries. This signifies a stable to slight improvement in the trade balance in the future, according to ANZ. The extent of the improvement would significantly depend of whether the NZD continues to be contained or not.