By BRIAN FALLOW
With a strong export performance in June, New Zealand's trade figures are continuing their climb back to respectability.
Exports of $2.43 billion for the month were up 31.8 per cent on June last year, but still $24 million less than imports, which were 20.6 per cent higher than a year ago.
The annual trade deficit was $3.18 billion, an improvement from its worst level of $3.57 billion recorded last December.
Taking the three months to June, dairy exports were 27 per cent ahead of last year, meat exports 22 per cent, timber 42 per cent and wool 18 per cent.
Exports of mechanical and electrical machinery were also well up, 18 and 35 per cent respectively.
The exchange rate has depreciated 10.3 per cent since June last year.
Of the 25 per cent growth in export values in the June quarter, compared with the same period last year, Deutsche Bank estimates higher prices account for 11 per cent, indicating significant growth in volumes as well.
It expects export volume growth to continue over the next three years, at about 5.5 per cent a year, on the back of strong world growth and a stimulatory exchange rate.
The trade balance should also benefit from better terms of trade, said Deutsche Bank economist Darren Gibbs.
However, the increasing cost of funding a growing stock of overseas claims on the New Zealand economy, as reflected in the current account's investment income line, means the overall improvement in the balance of payments is likely to be modest. Deutsche Bank forecasts the deficit to narrow from the present 8.2 per cent of GDP to 7.6 per cent by the end of the year and about 6 per cent by the end of next year.
Bank of New Zealand economists said yesterday's figures showed the export sector was now firing on all cylinders and with farmers expecting another record season, the pace was likely to continue.
By contrast, the underlying trend for imports was slowing, they said, with increases mainly reflecting the weaker currency and higher oil prices.
But the improving trade figures had little immediate impact on the New Zealand dollar, even though they were seen as supportive. It closed slightly down at US45.36c from Tuesday's close of 45.50c.
Booming exports help trim trade gap
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