Imports, dollar widen gap in trade

By BRIAN FALLOW

The trade gap continued to widen in March as exporters struggled with a high dollar and a weak world economy, while consumers' appetite for imports showed little sign of abating.

In the year ended March imports exceeded exports by $1.85 billion, up from $1.7 billion in the year ended February.

The month of March recorded a surplus of $346 million, down from $501 million in March last year but better than the $150 million the markets were expecting.

Exports may have been boosted by early meat processing as the dry weather bites, Bank of New Zealand economists suggest.

In the March quarter export receipts were 9.3 per cent lower than in the same period last year.

The exchange rate has appreciated 17.4 per cent since then.

But imports fell only 2.7 per cent compared with the same period last year.

Imports of consumer goods were almost unaffected by the currency appreciation; they were only 0.7 per cent lower in the latest March quarter than in the same period last year. Car imports were 0.6 per cent higher.

But imports of plant and machinery were 7.7 per cent down on the March 2002 quarter.

Deutsche Bank economist Darren Gibbs said the March trade data suggested New Zealand would record a current account surplus of $30 million for the March quarter, $800 million less than the same period last year.

That would push the annual current account deficit to $4.8 billion or 3.8 per cent of gross domestic product, compared with its previous peak of 2.1 per cent a year ago.

"We see the external deficit peaking at around 4.5 per cent of GDP during the course of this year," Gibbs said.