New Zealand's trade balance is improving and that could drive the current account deficit down to 3 per cent of GDP within 18 months, says Deutsche Bank senior economist Darren Gibbs.
Statistics New Zealand yesterday said the value of exports grew in August, the same month the New Zealand dollar began its rapid decline to all-time lows against the greenback.
But Statistics NZ revised the trade deficit for August higher, to $364 million, from the preliminary $345 million it estimated last month. The average trade deficit recorded in the previous 10 August months was $208 million.
Exports during August were valued at $2.381 billion, up 3.7 per cent from July and 26.7 per cent higher than the same month last year.
In August, imports were worth $2.745 billion, 2.6 per cent more than the previous month and 19.1 per cent more than last August.
Mr Gibbs said the figures confirmed trade balance trends were improving.
"However, it seems clear that a substantial improvement in the trade balance in still in the offing over the next two years, driven by robust world growth, a stimulatory exchange rate, firm world prices for New Zealand's export commodity prices, and the prospect of a reduction in international crude oil prices," he said.
"Assisted by a number of one-offs dropping out of the annual balance of payments calculation, notably the $631 million frigate, the improving trade balance appears likely to drive the current account deficit down to around 3 per cent of GDP by early 2002."
Bank of New Zealand economists said yesterday's moderate trade deficit.
The provisional value of exports for the year to August was $26.812 billion, up 17.2 per cent.
- NZPA
Deficit tipped to fall as exports pick up
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