Trade deficit hits record high

New Zealand's trade deficit hit record levels in November, on both an annual and monthly basis, Statistics New Zealand said today.

For November the trade deficit was $1.2 billion, or 46.6 per cent of exports -- the highest monthly deficit for any month on record. Economists had been tipping a November deficit of $795 million deficit.

Stats NZ said over the past decade trade deficit for November has on average been 20.4 per cent of exports.

The annual trade deficit for the year to November was $6.6 billion, or 21.6 per cent of exports. Statistics New Zealand said that as a percentage of exports the annual deficit was the largest for a November year since the oil crisis of 1975.

UBS NZ chief economist Robin Clements said the blow out should not affect markets too much. He said aircraft-related purchases could explain the extent of the blowout.

He said the fact strong domestic demand was being met by imports pointed to a drag on economic growth, but pointed out this was not new information.

"What will be new is when the deficit starts to improve. That process is underway with the economy softening, but it also requires a fall in the New Zealand dollar, which we expect later this year, and it could be another year after that before the currency has a real effect," he said.

Shortly after the trade deficit was announced the New Zealand dollar was fetching US68.66c, down from US68.98c earlier this morning.

Imports of merchandise goods for November were provisionally valued at $3.8 billion, 15.1 per cent higher than the same time last year. This was boosted by higher import values for aeroplanes, and petrol.

Stats NZ said the value for imports was the highest for any month on record, and included one-off items worth $209 million.

Imports from the United States in November were up $179 million on last November, mainly due to imports of aircraft and parts.

Imports from Japan were up $119 million, mainly due to increased imports of automative diesel, mechanical machinery and equipment.

On an annual basis imports of merchandise goods were provisionally valued at $37.4 billion, up 7.8 per cent on the previous November year.

Monthly exports of merchandise goods were 0.8 per cent lower than last November at $2.6 billion, pushed down by lower values for wood pulp, wood and wood products.

The biggest monthly drop in exports by country was for Japan, down $66 million. Increases were reported for Belgium, up $20 million; India, up $17 million, and Korea, up $16 million.

For the year ended November, exports of merchandise goods rose 0.9 per cent on the previous November year to $30.7 billion.

- NZPA, REUTERS