Monthly trade surplus reaches five-year high

By Paul McBeth

Friday 27th March 2009

New Zealand's trade surplus widened to a five-year high last month as the nation's prolonged recession sapped demand for imported goods, which fell more than twice as much as exports.

The merchandise trade surplus was $489 million in February, the largest since May 2004, according to Statistics New Zealand. That's more than double the $219 million forecast in a Reuters survey and followed a $104 million deficit in January. Imports tumbled 14.2% to $3 billion from February last year, its largest fall since February 1993. Exports fell 6.6% to $3.5 billion from the same period last year.

The improving trade balance bodes well for the current account deficit, which widened to a record $16.1 billion last year. Exporters are being helped by a 27% slide in the kiwi dollar in the six months through early March. Since then, the kiwi has climbed 17%.

"The recent resurgence in the currency, if sustained, could yet hamper the export recovery we are relying on," economists at ANZ National Bank said in a report. The current account deficit is "likely to show an improvement" in the first three months of 2009, they said.

New Zealand's dollar recently traded at 57.80 US cents, down from 57.96 cents yesterday.

Imports have been falling at an average monthly rate of 1.7% since September. February's figures were driven lower by a 70% fall in crude oil shipments to $113 million and a 54% slump in motor vehicles and parts to $203 million. Electrical machinery and equipment bucked the trend, rising 20% to $317 million.

The decline in exports was led by 28% drop in milk powder, butter and cheese to $740 million. Crude oil fell 42% to $101 million and aluminium declined 45% to $63 million. Meat and edible offal exports rose 24% to $633 million.

Imports from Asian nations, which account for more than a third of total inbound goods, fell 16% to $1.3 billion.

Exports to the US, the nation's second-largest market, rose 31% to $448 million, while the value of goods shipped to China rose 28% to $293 million. Exports to Australia, New Zealand's biggest trading partner, fell 12% to $700 million.

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