Record trade deficit likely

The trade deficit is expected to have swollen to record levels as idling meat and dairy export earnings fail to offset New Zealanders' continued appetite for cheap imported goods.

Tomorrow's merchandise trade data are expected to show the October-year trade deficit widened to $6.10 billion, according to a median forecast of 10 economists surveyed by Bloomberg News.

Imports are expected to come in at 8.8 per cent above the same month a year ago, with export earnings picked to remain the same, giving a monthly deficit of $840 million compared with $536 million for October last year.

Westpac senior economist Nick Tuffley believed imports would have remained high. October meat exports were expected to be a bit weaker due to timing issues with stock killing.

Deutsche Bank senior economist Darren Gibbs said that despite signs of a fantastic start to the season, there was some evidence that dairy exports were relatively muted.

Gibbs and Tuffley did not expect the trade deficit to begin narrowing again until at least the middle of next year.