New Zealand Trade Deficit Unexpectedly Narrows on Import Slump

New Zealand’s annual trade deficit unexpectedly narrowed in December as imports fell to an eight-month low while dairy exports increased to the highest since January last year.

Imports exceeded exports by NZ$1.21 billion ($1 billion) in 2012, compared with a revised NZ$1.39 billion shortfall in the year through November, Statistics New Zealand said today in Wellington. Economists expected a NZ$1.87 billion gap, according to the median of seven forecasts in a Bloomberg News survey.

Exports fell 3.5 percent last year from 2011 as slowing global demand curbed commodity prices and the New Zealand dollar’s 6.6 percent gain cut returns. Policy makers are betting that a recovery in key markets of 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.

“Chinese GDP growth and iron ore demand have recovered recently,” Jane Turner, economist at ASB Bank Ltd. in Auckland, said in a research note before today’s report.

The local currency was little changed after the report, buying 83.37 U.S. cents at 10:48 a.m. in Wellington.

Prices for the nation’s commodity exports fell 5.2 percent in December from a year earlier, according to an index from ANZ Bank New Zealand Ltd. Still, the annual decline is narrowing amid a 7 percent recovery in prices from the 28-month low reached in July.

Exports to China rose 17 percent in 2012 from 2011. They make up 15 percent of total overseas sales.

Aircraft Purchase

In December, imports fell 10 percent from the year-earlier month to NZ$3.58 billion, the lowest since April, today’s report showed. Economists predicted NZ$4.13 billion. A slump in petroleum imports and the purchase of a large aircraft in the year-earlier month contributed most of the decline.

Exports in December fell 5.1 percent from a year earlier to NZ$4.07 billion. Economists predicted NZ$3.98 billion.

Overseas sales of milk powder, butter and cheese, which make up about a quarter of total exports, fell 5.3 percent from December 2011. Still, the monthly value of NZ$1.28 billion was the highest since January 2011 as seasonal milk production increases.

The slump in imports meant New Zealand had a monthly trade surplus of NZ$486 million compared with NZ$300 million in December 2011. Economists predicted a NZ$105 million deficit. The November monthly deficit was revised to NZ$590 million from NZ$700 million previously reported, led by a decline in the value of imports.

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