New Zealand's trade deficit blew out to more than NZ$1 billion in September
• Trade deficit blew out to NZ$1.1 billion
• Annual trade gap widened to - NZ$5 billion
• Exports rose 8%oya; imports surged 24%
New Zealand's trade deficit ballooned to NZ$1.18 billion in September (JPMorgan -NZ$800 million, consensus -NZ$550
million) from a revised deficit of NZ$846 million in August (previously NZ$750 million). The September result marked the
largest deficit this year and the first of more than NZ$1 billion since October 2006.
The 8%oya rise in exports was mainly owing to the large spike in exports of fruit (+45%), iron and steel (+32%), and
casein and caseinates (+51%) - the soluble salts of the acid casein (milk proteins). Crude oil shipments were up
15.3%oya, with prices higher but quantities lower than a year earlier, according to Statistics New Zealand. The largest
declines were in exports of aircraft and parts, which fell 72%oya due to a large aircraft being exported in September
last year.
On the other side of the trade ledger, imports rose 24.1%oya to a record for the September month, on the back of a 293%
surge in imports of fertilisers and diesel and a 301% spike in imports of salt, earths, stone, lime and cement. Imports
of petroleum and products rose 35% as global crude prices remained relatively high and the NZ dollar continued to head
south. NZD fell 4% vis-Ã -vis the US dollar in September.
Net exports will be a drag on economic growth this year and next. Weaker global demand will weigh on exports, even
though the sharp NZD depreciation will boost the competitiveness of Kiwi exporters. That said, NZD has strengthened
against AUD, which will weigh heavily on Kiwi exports given Australia is New Zealand's largest export destination.
Meanwhile, imports will weaken as domestic demand continues to flag amid the rapidly deteriorating housing market,
still-high interest rates, and loosening labour market conditions.