Balance of trade's wild ride continues

Friday 25th September 2009

Exports and imports continued their wild swing of the last year in August, reflecting a complex mixture of the global recession, plummeting oil prices and lower local oil production, as well as the collapse in dairy commodity prices.

Statistics New Zealand overseas merchandise trade figures, released this morning, show the balance of trade deficit for August 2009 at $759 million is well below the average deficit for that month and reflects a relatively balanced impact as both exports and imports simultaneously dried up.

The trend for exports has fallen 10.1% since October last year and is the biggest fall since the two years to June 2003, while the trend for imports is an even steeper fall, down 20.7% since August last year and the biggest fall in the imports trend since the series started 21 years ago, in 1988.

The trade figures are consistent with other signs that the global economic activity is bouncing back after going year ago after the Lehman Brothers collapse which reduced global demand and knocked back prices for key global commodities, including oil.

On the oil front, oil receipts were halved at $177 million for August, as domestic production was coming off highs a year earlier from the Tui oilfield and experiencing much lower global oil prices, while lower prices and economic contraction felled the oil imports bill by 45.1%.

Exports to China, the country's third largest export destination, rose fastest over the three months to August 31, up 40.6% on a combination of demand for wood products required for post-earthquake reconstruction, crude oil, and milkpowder.

Vehicle imports at were down $151 million, or 34.3%, on August last year, but up from the trough reached earlier in the year.

The impact of sharply falling dairy and meat prices was still apparent in August, with receipts in the month down 24.8% ($118 million) and 32.2% ($125 million) respectively against the same month a year ago.

Businesswire.co.nz

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