Trade surplus official

By Phil Boeyen, ShareChat Business News Editor

Monday 10th September 2001

New figures confirm that New Zealand has recorded its first trade surplus for six years.

Updated merchandise trade figures show the country had a surplus of $45 million for the year to the end of July, the first annual surplus since April 1995.

The surplus compared with a deficit of $3.144 billion for the previous year, which included $631 million for the import of the frigate HMNZS Te Mana, as well as several large aircraft.

Updated figures show that total merchandise exports for the year ended July were $32.336 billion, a 23% increase on the previous year.

Leading the export boom was a rise in dairy exports such as milk powder, butter, cheese, casein and caseinates. These accounted for 40% of the export jump.

Despite the year-on-year surplus, in July the trade balance was a deficit of $42 million.

During the past five months there has been slightly stronger growth in the imports trend than the exports trend, which has caused the trade balance trend to decline.

The New Zealand Institute for economic research says exporters have benefited not only from strong volume growth, but also from the low New Zealand dollar.

However it predicts that growth in the economies of our trading partners will ease to 1.9% in the current calendar year, down from 4.6% last year.

"As a result, export growth will slow. A gradual appreciation in the exchange rate will also squeeze exporters' earnings," the NZIER says.

The tourism sector is tipped to be the standout export performer in the current year to March 2002, with the number of tourists visiting New Zealand rising faster than the institute had expected.

"During the Asian crisis, the tourism sector was hit hard as the affordability of New Zealand as a destination sank under the dual burden of a rapid depreciation in Asian currencies, and declining Asian incomes.

"The weak New Zealand dollar has, so far, saved the tourism sector from another shock."

The NZIER says there are two key downside risks facing export industries.

"The agricultural sector is still facing problems from drought. Although these are not as serious as earlier droughts, they will constrain production.

"The exchange rate is a significant risk for all exporters. A rapid appreciation of the exchange rate would put pressure on exporters' international competitiveness, and further squeeze their earnings."

Offsetting the fragile export outlook, the institute believes there will be a pickup in domestic consumption., with household expenditure driving economic growth over the next 18 months.

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