New Zealand’s Annual Trade Deficit Widens as Exports Decline

New Zealand’s annual trade deficit unexpectedly widened in January as exports fell to a four-month low, led by reduced sales of dairy products.

Imports exceeded exports by NZ$1.3 billion ($1.1 billion) in the 12 months ended January, compared with a revised NZ$1.16 billion shortfall in the year through December, Statistics New Zealand said today in Wellington. Economists expected an NZ$897 million gap, according to the median of nine estimates in a Bloomberg News survey.

Exports fell 5.1 percent in the 12 months through January as slowing global demand curbed commodity prices and the New Zealand dollar’s gain cut returns. Policy makers are betting that a recovery in Australia and China, which together take more than a third of the nation’s exports, will help accelerate New Zealand’s economic recovery this year.

Prices for the nation’s commodity exports declined 10 percent in January from a year earlier, according to an index from ANZ Bank New Zealand Ltd. that is adjusted for gains in the nation’s currency.

The local dollar was little changed after the report, buying 82.47 U.S. cents at 10:51 a.m. in Wellington.

Fonterra Cooperative Group Ltd. (FCG), the world’s largest dairy exporter, today said it forecasts dairy prices will move higher in the next few months. Still, the Auckland-based company cut its forecast milk collection for the season ending May 31, citing dry conditions in parts of the country.

Exports in January declined 10 percent from a year earlier to NZ$3.35 billion, the lowest since September. Economists predicted NZ$3.6 billion.

China Overtakes

Overseas sales of milk powder, butter and cheese, which make up about a quarter of total exports, dropped 16 percent from January last year.

China was New Zealand’s largest trading partner, surpassing Australia for a second straight month.

In January, imports fell 6 percent from a year-earlier to NZ$3.65 billion. Imports were little changed when a large aircraft purchase in January 2012 is excluded, today’s report showed. Economists predicted NZ$3.5 billion.

The drop in exports meant New Zealand had a monthly trade deficit of NZ$305 million, compared with a revised NZ$534 million surplus in December. Economists predicted a NZ$125 million surplus.

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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