NZ posts worse than expected monthly trade deficit

New Zealand posted yet another monthly trade deficit worse than forecast, according to Statistics New Zealand figures out today.

The July deficit was $617 million compared with economists' predictions of $501m.

"While a deficit is normal for a July month, this deficit is the largest July deficit on record," Government Statistician Brian Pink said.

It compares with a deficit of $384m in July 2004.

The July year deficit swelled to $5.4 billion from $3.42 billion a year earlier.

July exports were worth $2.43 billion, down 1.4 per cent on July 2004, while imports were $3.05 billion, up 6.9 per cent on July 2004.

Apart from Australia, exports to New Zealand's four main trading partners (Japan, China and United States) all fell from a year earlier.

These four account for over half of New Zealand's trade.

"With the exception of the United States, imports from these countries all increased in the July 2005 month compared with the July 2004 month," Mr Pink said.

Deutsche Bank economist Darren Gibbs said in the scheme of things the result was not a big surprise.

" We've had bigger surprises of late, but one thing that is a clear trend is to get surprises on the negative side, towards bigger trade deficits, so it does continue to illustrate that we are leaking demand to offshore and the current account is going to get worse before it gets better."

UBS economist Robin Clements said "at the end of the day it's not good news for the prospects on the external accounts".

"The current account probably still heading further into the red."

He said the data was probably saying that exports were not doing overly well which was not surprising given sustained strength in the currency, while imports were holding up.

- NZPA