Data Flash (New Zealand) Overseas Merchandise Trade - February, Final
Commentary
The new information in today's release was the composition of export receipts during February (see table below) and
minor revisions to historical trade data stretching back to 1997.
Dairy exports in February were 11.5% weaker than a year earlier year, largely reflecting lower volumes of milk powder.
Diary receipts are like to weaken further over the next year, as the implications of sharp falls in prices become
apparent. Exports of electrical machinery and equipment posted another poor result, declining 17% compared with a year
earlier. This likely reflects the ongoing slump in capital spending following the 11 September terrorist attacks. With
the export sector continuing to be affected by past sluggishness in global demand and weakening prices, and imports
being driven higher by strong domestic demand, today's result further confirms that the trade balance is now on a
deteriorating trend (the trade balance for the three months to February was $442m lower than a year earlier). While the
annual current account deficit declined to 3.2% of GDP in the 2001 calendar year, a deficit of a little over 4.5% of GDP
now appears likely for the current calendar year (more in line with the historic average over the last 20 years).
Key Points
A merchandise trade surplus of $271m was recorded in February. A provisional surplus of $269m had been reported on 27
March. Incorporating revisions to earlier data, the trade surplus for the year to February was $479m (previously
estimated at $512m). This compares with a deficit of $1,019m a year earlier. The value of exports for the three months
to February was 1.8% lower than a year earlier, with falling prices now more than offsetting modest growth in volumes.
The value of imports for the three months to February was 4.2% higher than a year earlier, with higher import volumes
offset by lower import prices (due to lower oil prices and a modest recovery in the NZD from its year-earlier lows).
Next Release: March (29 April). Preliminary Estimate: Trade Balance, +$66m mth/+$411m ann
Darren Gibbs, Senior Economist, New Zealand