Data Flash (New Zealand)
NZ: Overseas Merchandise Trade (March, Final)
Key Points
A merchandise trade surplus of $93m was recorded in March. A provisional surplus of $74m had been reported on 1 May. The
average surplus for March over the past 10 years is $200m.
The trade deficit for the year to March was $1,071m, $10m lower than previously reported.
On a seasonally adjusted basis, export values fell 3.3% during the March quarter. However, this follows an increase of
11.4% in the December quarter. Weaker exports of meat, wool, fruit and nuts was only partly offset by stronger exports
of milk powder, butter and cheese. Exports of mechanical machinery and equipment rose 4.2% during the quarter. Despite
the fall in export values, we expect the Overseas Trade Indexes - due 11 June - to report positive growth in export
volumes during Q1. The trade-weighted exchange rate was over 5% higher in Q1 than in Q4 2000. Combined with an estimated
1% decline in the world price of exports over that period, price movements more than explain the decline in export
values.
The value of imports was unchanged from the estimate published on 1 May. The estimated level of imports for the three
months to March was 11.6% higher than a year earlier. Excluding `lumpy' imports of capital transport and military
equipment, `core' imports for the 3 months to March were 10.6% higher than a year earlier. We estimate that import
prices rose by around 9% over the same period, implying that core import volumes expanded by a little over 1%.
Commentary
Today's release offered little in the way of new information. We are mildly encouraged that exports of mechanical
machinery and equipment posted a 4% qoq rise despite the NZD strengthening against both the USD and AUD (which would
tend to lower recorded export values). Aggregate growth in export volumes - at around 2% in annual terms - remains
disappointing. However, we don't subscribe to the `this is as good as its gets' school of thought. The longer the NZD
remains at very competitive levels, the more likely that NZ producers will obtain the confidence necessary to expand
markets, especially if the global economy begins to enter a recovery phase later this year.
We expect the annual current account balance to fall to 4.7% of GDP in Q1 2001 and to around 4% of GDP during the second
half of 2001. The average deficit over the past 18 years is 4.8% of GDP.
Ends