NZ posts smaller-than-expected trade surplus as exports falter

Tuesday 26th May 2009

New Zealand posted a smaller-than-expected trade surplus last month as the kiwi dollar gained and the global downturn sapped demand for exports of dairy products, crude oil and aluminium.

The merchandise trade surplus was $276 million in April, down from a revised $447 million in March, according to Statistics New Zealand. A surplus of $386 million has been expected, based on a Reuters survey. Exports fell 4.6% to $3.6 billion while imports slumped 18% to $3.4 billion, the largest decline since the series began in 1962.

The New Zealand dollar climbed 5.6% on a trade weighted basis last month, its largest monthly gain since December 2000. A higher currency erodes the value of overseas sales. Meantime, the OECD yesterday said GDP for the 30 OECD nation’s fell 2.1% in the first quarter, the biggest quarterly slide since record began in 1960. In New Zealand, some economists expect the recession is two-third through its sixth quarter of contraction.

The kiwi dollar was recently at 61.92 U.S. cents after the trade report. It fell as low as 49.23 cents in March.

The New Zealand dollar’s gain will act as a brake on export growth though there is optimism that overseas shipments will recover, said Bernard Doyle, strategist at Goldman Sachs JBWere.Still, “in the absence of sharp export price recovery, this will begin to weigh on export growth over coming months,” he said.

The record slump in imports was led by a 53% fall in capital goods, or $592 million, made up mainly of civil engineering and other transport equipment.

April exports were pushed down by a 61% slump in crude oil from a year earlier to $129 million, which contributed to the 21% decline in total exports to Australia of $686 million.

Aluminium fell 52% to $62 million, while dairy exports shrank 5.4% to $703 million. Fruit exports rose 23% to $61 million, led by a $47 million gain in kiwifruit. Exports to China rose $126 million, or 65%, as the world’s fourth-largest economy increased the volume of milk powder and pine logs it purchased from New Zealand producers.

Businesswire.co.nz

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