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30/4/2018 — General
Trade deficit hits the crystal ball
By Simon Hartley

New Zealand's trade balance has teetered into the red for March, with fuel imports much higher than expected by analysts.

Total imports in March rose 14% or $612 million to $4.94 billion, while exports were down 2.6% to a total $4.85 B, Statistics New Zealand (SNZ) international statistics manager Tehseen Islam said.

Imports rose much more than exports, producing a $86 M deficit for March, with the markets having expected a $275 M surplus, ASB predicting $100 M surplus and Westpac $350 M.

ASB rural economist Nathan Penny said it was a weaker than expected March trade balance, in particular, fuel imports were stronger than expected.

“Specifically, petroleum and petroleum products import values spiked 40.5%,” he said.

With Brent crude prices lifting 2.5% during the month, the remainder of the spike in values could be put down to a surge in import volumes, Penny said.

Westpac senior economist Michael Gordon said the trade balance slipped into the red in March, against our forecast of a $350 M surplus.

The annual deficit widened to $3.4 B, its highest since June last year.

Islam said the rise in March imports, which had risen every month since December 2016, was mainly driven by imports of crude oil, petrol and diesel, aircraft, computers, and tractors.

“The rise in crude oil imports for the March 2018 month came mainly from the United Arab Emirates and Malaysia - while the rise in petrol and diesel imports came mainly from Korea,” he said.

Petroleum and products rose $297 M, or by 88%, to $634 M, the largest increase since a $453 M rise in December 2013.

Crude oil rose $198 M, while petrol and diesel rose $94 M for the month. The imports value of crude oil in March 2017 was the lowest since the February 2009 month, he said.

Milk powder, butter, and cheese lead the rise in exports, up by $265 M or 5.8%, to $4.9 B in March compared with a year ago, led by increases in butter and untreated logs.

Forestry products rose $70 M, or 18%, to $460 M, led by a rise in untreated logs to China, which was up $54 million, Islam said.

*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily News.

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