New Zealand's Trade Deficit Narrows on Stronger Export Demand in November

New Zealand’s trade deficit narrowed in November, as demand from China increased prices of dairy and lumber exports.

The shortfall was NZ$186 million ($141 million) from a revised NZ$224 million in October, Statistics New Zealand said today in Wellington. The median estimate in a Bloomberg News survey of five economists was for a NZ$150 million deficit.

Rising exports, which make up 30 percent of the economy, add to signs New Zealand may avoid a recession after gross domestic product fell 0.2 percent in the third quarter. The nation’s commodity exports are attracting record prices in world markets, amid increased demand from China and other Asian countries.

“The strength of emerging Asian economies is a large factor behind the strength in export earnings,” said Jane Turner, economist at ASB Bank Ltd. in Auckland. “The strength in commodity prices, particularly dairy, has been a positive development for agricultural exporters over the past year.”

New Zealand’s dollar fell after the report. It bought 75.91 U.S. cents at 11:25 a.m. in Wellington from 75.98 cents immediately before the data were released.

Exports rose 19 percent from the year-earlier month to NZ$3.65 billion, today’s report showed. Imports gained 15 percent from a year earlier to NZ$3.84 billion.

Commodity Prices

Commodity prices rose 4.5 percent in November from October, according to an index calculated by ANZ National Bank Ltd. From a year earlier, the index increased 24 percent.

China’s economy expanded by about 10 percent in 2010, according to an estimate by Vice Premier Li Keqiang reported by Xinhua news agency on Jan 7.

Dairy exports, which make up a fifth of overseas sales, rose 32 percent from the year-earlier month to NZ$997 million. Last month, Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, raised its forecast payment to New Zealand milk suppliers by 4.5 percent, citing higher international prices.

Lumber exports increased 33 percent, according to today’s report. Sales of meat, wine and aluminum also increased.

Exports of all goods to China, the second-largest market for New Zealand after Australia, increased 46 percent to NZ$421 million, the report showed.

Imports were led higher by vehicles and machinery, in particular aircraft engines and wind turbines, the statistics agency said. Crude oil purchases fell as prices dropped 3 percent.

New Zealand posted a trade surplus of NZ$1.35 billion in the 12 months ended Nov. 30. Economists expected a 12-month surplus of NZ$1.31 billion.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net.

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