Trade deficit blows out again in February

New Zealand's trade position continues to deteriorate, with official figures out today showing the merchandise trade gap swelled to $7.22 billion - a new record high - in the year to February 28, as aircraft purchases ratcheted up the cost of imports, while exports eased.

Although the deficit, based on a monthly export shortfall of $257 million, was just shy of economists' worst case estimates of $7.3 billion, it indicated the country's current account deficit has little chance of easing from record levels in the near term.

"It will be a while yet before we are printing better numbers," Deutsche Bank chief economist Darren Gibbs told Reuters.

Figures out last week show the current account deficit - measuring all of New Zealand's dealings with the outside world - ballooned to $13.7 billion, or 8.9 per cent of GDP, in 2005.

"Turning around New Zealand's woeful trade position... will be achieved only when New Zealand consumers rest their 'I want it now' buy-and-spend behaviour," ANZ National Bank economist John Bolsover said.

The overseas merchandise trade data measures the difference between what New Zealand earns for its exports, versus what it pays for its imports.

February is traditionally a month of bumper surpluses, with agricultural production in full swing.

That was not the case this year, however, with exports, worth $2.6 billion, falling 1.8 per cent compared with the same month a year earlier. The fall was due largely to lower meat exports, particularly beef and lamb. On an annual basis, exports declined 1.2 per cent.

Imports, at $2.86 billion, rose 3.8 per cent in the month, mostly due to petroleum products and aircraft.

The monthly trade deficit of $257 million equated to 9.9 per cent of exports, compared with an average trade balance over the past decade of a surplus of 3.3 per cent.

The annual deficit, at 23.5 per cent of exports, was the largest on record since 1976.

Excluding big ticket items such as aircraft, the annual deficit would have been $6.38 billion.

The New Zealand dollar was largely unmoved by the data, trading at US61.14c from its local open of US61.08c.

The local unit has fallen over 10 per cent in the past month on a string of weak economic data, which should provide some relief for exporters in the coming months.

It is nearly 18 per cent lower than its 23 year post-float high of US73.65c hit in March last year.

- NZPA