New Zealand’s trade surplus narrows in March, terms of trade to fall around 10 pct in 2016

New Zealand posted headline trade surplus of $117 million in March, as compared with market expectations of $401 million. Import and export values both came in below expectations. But details of the data give a weaker picture, noted ANZ. At $117 million, it was the smallest trade surplus New Zealand recorded for March since 2008. The seasonally adjusted deficit widened to $588 million, the biggest since September 2014 and the 10th straight seasonally adjusted deficit.

New Zealand’s seasonally adjusted export values declined sharply by 17% m/m in March after dropping 8.5% m/m in the prior month. Exports recorded a value of $3.4 billion, the lowest level since December 2009.

Delving into details, export volumes of meat dropped 13%, whereas that of dairy fell 17%. The primary good exports softness possibly indicates timing problems of inventories, production and exports. However, the weakness might also emphasize certain domestic headwinds that are clearly visible in milk production. Meanwhile, values of seasonally adjusted imports fell 5.2% m/m, declining for the second straight month. Imports of consumption and immediate good are expected to have driven the decline in March.

Prior to March’s trade data, the accounts were performing quite well. March’s data indicates that primary export volumes were boosted by certain temporary factors.

“With the latter now unwinding and the impact of the two former drivers also expected to wane over the coming months we see the goods terms of trade falling by circa 10% over the remainder of the year”, said ANZ.

This is in line with the projection of decline in the nation’s trade performance in 2016, added ANZ.