New Zealand’s annual trade deficit unexpectedly widened in January as reduced sales of dairy products helped send exports to a four-month low.
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 demand, falling commodity prices and the New Zealand dollar’s gain cut returns, adding to signs of a modest economic recovery that may prolong a period of record-low interest rates. Sales to Australia slumped 13 percent, leaving China as New Zealand’s largest trading partner for a second month.
“The high New Zealand dollar remains a road block to export sector prospects,” Mark Smith, senior economist at ANZ Bank New Zealand Ltd. in Wellington, said in an e-mailed note. “Concerns over the health of the wider tradable sector are likely to prevent the cash rate moving higher over the remainder of the year.”
The local dollar was little changed after the report, buying 82.45 U.S. cents at 11:41 a.m. in Wellington.
Prices for the nation’s commodity exports declined 10 percent in January from a year earlier, according to an index from ANZ that is adjusted for gains in the nation’s currency.
Fonterra Cooperative Group Ltd., 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.
Overseas sales of milk powder, butter and cheese, which make up about a quarter of total exports, dropped 16 percent from January last year.
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.