New Zealand's trade deficit has grown and may widen further, as imports for the Canterbury rebuild and rising dairy prices both come into play.
Statistics New Zealand data released yesterday showed the November trade balance was a deficit of $700 million.
The figure was close to market forecasts but pushed the annual trade balance out to a deficit of $1.4 billion, compared with a surplus of $288m in the previous year to November.
However, analysts noted that 2011 was a stronger than usual year for dairy prices and that November is traditionally in deficit.
Westpac economist Nathan Penny said it was evident that the benefits of last year's bumper agricultural production were tailing off.
"Last year dairy prices were a lot higher and things like imports were pretty weak at that stage as well. Consumers weren't spending much - nor are they spending much still at this stage - but that weakness would have added to the balance as well."
Penny expected the deficit would continue to expand over the next 18 months.
"The main thing for the next year is the rebuild and we'll be getting more machinery and equipment in for that, so that's likely to boost imports and as a result the balance will widen."
However, the outlook for exports was also better, with good growing conditions adding a 2 to 3 per cent rise to dairy production forecasts. "We expect both [exports and imports] will be increasing but imports will be increasing just a tad faster."
Annette Beacher, of TD Securities, expected the growth in imports to be largely neutral for growth forecasts, as firms replaced depleted inventories using the strong kiwi dollar. During November, the value of exports fell by 2.4 per cent to $3.8 billion, compared with a year earlier.
Statistics NZ spokeswoman Louise Holmes-Oliver said exports to China jumped 60 per cent, boosted by logs and unsweetened milk powder, which both doubled in price.
The milk powder, butter and cheese category was particularly hard-hit, down $121m or 10 per cent in value compared with the previous November.
Exports in logs and meat helped offset the decline, with logs, wood, and wood product exports up $46 million or 19 per cent.
Meat exports rose $32 million or 10 per cent, on higher volumes of beef and lamb cuts.
On the other side of the ledger, the value of imports in November was flat at $4.5b. Imports of intermediate goods such as crude oil and petrol had the largest increase in value, up $114m or 6 per cent.
On a seasonally adjusted basis, total export values grew by 8.9 per cent for the month with dairy products making the largest contribution, up nearly 25 per cent.
Crude oil exports were down 28 per cent for the month. Total seasonally adjusted imports rose almost 11 per cent. Fairfax
- © Fairfax NZ News
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