New Zealand Annual Trade Gap Narrows as Imports Fall (Update1)

Tuesday, May 26, 2009
May 26 (Bloomberg) -- New Zealand’s trade deficit narrowed to the smallest since 2005 as the nation’s deepest recession in more than three decades led to a record drop in imports. The shortfall shrank to NZ$4.11 billion ($2.5 billion) in the 12 months ended April 30 from NZ$4.68 billion in the year through March, the statistics bureau said in Wellington today. That’s less than the NZ$4.15 billion median estimate in a Bloomberg News survey of seven economists. Demand for imports has tumbled as companies cut investment while the highest unemployment in six years has prompted the nation’s consumers to restrain spending. As well as a slowdown in the domestic economy, New Zealand is grappling with a decline in export earnings as the global recession damps sales of commodities such as milk products and aluminum. “Expenditure on imports has plunged as demand for consumer durables dried up,” Westpac Banking Corp. economists wrote in a May 25 report. “Investment imports will be rock bottom in this environment.” New Zealand’s dollar traded at 61.86 U.S. cents at 11:20 a.m. in Wellington from 61.98 cents before the figures were released. The NZX 50 stock index rose 0.4 percent to 2,750.63, heading for its first gain in four sessions. 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 April, there was a trade surplus of NZ$276 million compared with a NZ$293 million deficit a year earlier. Economists expected a NZ$250 million surplus. Machinery Imports Imports fell 18 percent from a year earlier to NZ$3.37 billion, the statistics bureau said. The NZ$745 million decline was the most since records began in 1962. There were large one-time machinery imports in April last year that exaggerated the decrease, the agency said. Capital- goods imports more than halved to NZ$485 million from NZ$1.01 billion a year earlier. Excluding machinery, the drop in imports was led by cars and other transport equipment Confidence among New Zealand companies slumped to the lowest since 1974 in the first three months of this year, according to a business poll published on April 7. New Zealand’s economy began contracting in the first quarter of last year and will probably remain in recession until at least June 30, Finance Minister Bill English has said. Exports fell 4.6 percent from a year earlier to NZ$3.65 billion, led by a decline in crude oil and aluminum shipments. Commodity prices tumbled 30 percent in April from a year earlier, according to an index compiled by ANZ National Bank Ltd. Sales of milk powder, butter and cheese, which make up almost one-fifth of total exports, dropped 5.4 percent, today’s report showed.

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