New Zealand Posts Smallest Annual Trade Deficit Since December
New Zealand posted its smallest annual trade deficit since December, as exports rose and imports fell in the year ended October.
The trade deficit was NZ$1.2 billion ($843 million) in the 12 months ended October, Statistics New Zealand said in a statement on Wednesday. That’s the smallest since December and compares with a NZ$2.2 billion deficit in the year ended September.
Exports Rise
Exports rose 4.3% to NZ$58.2 billion in the year ended October, led by a 10% increase in dairy products, the nation’s biggest export. Meat exports rose 8.2%, while fruit exports jumped 17%.
Imports fell 0.7% to NZ$59.4 billion in the year ended October, led by a 5.3% drop in consumption goods.
Trade Balance
The trade balance has been in deficit since April 2019, as imports outpaced exports. The deficit was NZ$1.2 billion in the year ended October, compared with a NZ$2.2 billion deficit in the year ended September.
The annual trade balance has been in deficit since April 2019, when it was last in surplus.
Export Markets
Australia was the biggest export market in the year ended October, taking NZ$14.2 billion of goods, followed by China at NZ$10.3 billion and the U.S. at NZ$5.3 billion.
The biggest source of imports was China, at NZ$14.3 billion, followed by Australia at NZ$10.2 billion and the U.S. at NZ$5.2 billion.
Currency Impact
The New Zealand dollar has been trading near a two-year high against the U.S. dollar, buoyed by the nation’s strong economic recovery from the Covid-19 pandemic.
The kiwi dollar was trading at 72.19 U.S. cents at 11:45 a.m. in Wellington, up from 71.87 U.S. cents at the start of the year.
Economic Outlook
The New Zealand economy is expected to remain strong in the coming months, with the Reserve Bank of New Zealand forecasting growth of 4.5% in the year ending March 2024.
The central bank has kept its benchmark interest rate at a record low of 0.25% since March 2020, and is expected to keep it there until at least the end of 2024.
Trade Surplus
The trade balance is expected to return to surplus in the coming months, as exports continue to rise and imports remain subdued.
The government is also expected to continue to support the economy with fiscal stimulus, which should help to boost exports and reduce imports.
Conclusion
New Zealand posted its smallest annual trade deficit since December, as exports rose and imports fell in the year ended October. Exports rose 4.3% to NZ$58.2 billion in the year ended October, led by a 10% increase in dairy products, the nation’s biggest export. The trade balance is expected to return to surplus in the coming months, as exports continue to rise and imports remain subdued. The New Zealand economy is expected to remain strong in the coming months, with the Reserve Bank of New Zealand forecasting growth of 4.5% in the year ending March 2024.