Trade gap spreads wider

By BRIAN FALLOW, economics editor

The trade gap widened last month when a $721 million excess of imports over exports pushed the annual deficit to $3.18 billion, the worst since July 2000.

Imports, at $2.95 billion, were 5.9 per cent higher than in September last year.

That is in spite of the New Zealand dollar's rise in the interval, boosting its international purchasing power by more than 16 per cent on a trade-weighted basis.

Some of last month's increase was a correction from August's smaller than expected deficit. But even if you take the September quarter as a whole, imports were only 2.5 per cent lower than in the same period last year, while exports were an estimated 7.2 per cent lower.

Deutsche Bank economist Darren Gibbs said that, allowing for price movements, he estimated import volumes had grown by about 10 per cent over the past year, while export volumes were 2 or 3 per cent higher.

The monthly deficit was nearly twice as wide as financial markets were expecting.

Imports included the first of Air New Zealand's Airbus jets, but Statistics New Zealand said there were no individual items worth more than $100 million.

A record number of new cars - 8584 - were imported. Car imports, new and used, were 26.6 per cent ahead of September last year, but for the whole September quarter the increase was a more modest 5.6 per cent.

Imports of other consumer goods were 2.8 per cent down on the September quarter last year, and imports of plant and machinery down 2.7 per cent.

Bank of New Zealand economist Craig Ebert said the trade figures supported the idea that economic growth recovered well in the September quarter from the June quarter's soft patch.

But the implications for the balance of payments were not so reassuring, he said.

"It now looks as though the current account deficit will expand slightly to 4.7 per cent of GDP in the year to September," Ebert said.

"This brings the prospect of a breach of 5 per cent into frame, which is often a discomforting psychological level for the market."

Reflecting the 2.5 per cent decline in imports overall in the September quarter, imports from five of New Zealand's six largest trading partners were lower.

The exception was China, imports from which increased 7.3 per cent to $780 million.

Over the year ended September New Zealand imported $2.74 billion of goods from China, 8.6 per cent of all imports.