26 Nov 2015
NZ prints eight trade deficit year-to-date - ANZ
FXStreet (Delhi) – Philip Borkin, Senior Economist at ANZ, notes that a $963m trade deficit was recorded in October for NZ, which was in line with market expectations (-$1,000m) with both export and import values undershot expectations.
Key Quotes
“In seasonally adjusted terms, the deficit printed at $445m, which is the eighth deficit recorded year-to-date. Seasonally adjusted export values dipped 0.6% m/m and follow a 9.1% m/m drop in September. Although dairy export volumes posted a modest bounce (+1.9% m/m), values were weighed down by implied price weakness (a catch up to earlier global price falls). Drops in values were also seen in meat, forestry and seafood exports, with lower implied NZD prices also generally evident (particularly for forestry).”
“Import values lifted 0.2% in seasonally adjusted terms. However, this was dominated by a surge in petroleum imports (+15% m/m), which are volatile. Excluding this, import values fell 2.1%. Imports had previously shown a degree of resilience, which is likely due to a combination of a still reasonable domestic demand backdrop and “J-curve” type forces (where the lower NZD initially pushes up the cost of imports before volumes adjust). However, this story looks to be waning to a degree, with import values now easing in trend terms (-0.1% m/m).”
“Some large one-off imports contributed to a sharp deterioration in the trade balance in the September quarter. Today’s figures suggest further deterioration is likely, albeit at a more modest pace. The widening trade balance is the major driver behind the widening in New Zealand current account deficit, which is expected to approach 6% of GDP by mid-2016.”
Key Quotes
“In seasonally adjusted terms, the deficit printed at $445m, which is the eighth deficit recorded year-to-date. Seasonally adjusted export values dipped 0.6% m/m and follow a 9.1% m/m drop in September. Although dairy export volumes posted a modest bounce (+1.9% m/m), values were weighed down by implied price weakness (a catch up to earlier global price falls). Drops in values were also seen in meat, forestry and seafood exports, with lower implied NZD prices also generally evident (particularly for forestry).”
“Import values lifted 0.2% in seasonally adjusted terms. However, this was dominated by a surge in petroleum imports (+15% m/m), which are volatile. Excluding this, import values fell 2.1%. Imports had previously shown a degree of resilience, which is likely due to a combination of a still reasonable domestic demand backdrop and “J-curve” type forces (where the lower NZD initially pushes up the cost of imports before volumes adjust). However, this story looks to be waning to a degree, with import values now easing in trend terms (-0.1% m/m).”
“Some large one-off imports contributed to a sharp deterioration in the trade balance in the September quarter. Today’s figures suggest further deterioration is likely, albeit at a more modest pace. The widening trade balance is the major driver behind the widening in New Zealand current account deficit, which is expected to approach 6% of GDP by mid-2016.”