New Zealand records trade surplus in May on stronger-than-expected export values

New Zealand’s goods imports for May grew 5.7 percent to $4.2 billion in May 2016, which is mainly driven by increase in consumer goods imports that grew 16 percent y/y, according to Statistics New Zealand. Meanwhile, goods exports were up 5.1 percent y/y to $4.6 billion, driven by fruit and forestry products.

The headline trade surplus for May came in at $358 million, more than market projections of $182 million. The surplus was driven by stronger than anticipated export values. In seasonally adjusted terms, the country recorded a deficit of $93 million. The deficit continues to narrow from March’s deficit of $ 475 million.

Values of exports, on a seasonally adjusted month-on-month basis were quite unchanged, -0.6 percent. Lately, export values have been quite volatile. It fell sharply in February and March, and then recovered in April. There were certain countering movements in May, with seafood, dairy and mechanical machinery exports slightly weaker, whereas forestry, meat and fruit exports were slightly firmer.

Meanwhile, the seasonally adjusted import values came in at -1.3 percent on sequential basis. The change was quite modest considering recent volatility, noted ANZ in a research note. The country recorded stronger capital goods imports; however, it was countered by declines in intermediate and consumption goods in the month. Values of imports, in terms of trend, are widely flat.

Before the latest global events, the baseline view was that the nation’s trade accounts would worsen in the next 12 months, said ANZ. This is based on a projection of additional declines in the terms of trade. There is extreme uncertainty now; however, it is difficult to see the recent global events as a positive development for exporters of New Zealand, according to ANZ. Commodity prices will be closely watched in the near term. However, on a longer-term basis, the increased push-back against globalization is also something that requires to be closely monitored and is a worry for a trade reliant country such as New Zealand, added ANZ.