Monthly trade registered a $304 million deficit in January 2013, following a surplus in December 2012. The decrease in monthly exports of dairy and crude oil, and the renewed strength in imports caused this return to the red zone.
Annually, the trade deficit crept up to about $1.3 billion or 2.8 percent of the value of total exports in the year to January 2013. Annual exports were at record low, with receipts dropping by 5.1 percent from last year.
Following months of slow growth in 2013, receipts from dairy exports fell by 7.7 percent in the year to January 2013. Meat exports also suffered setback in sales as annualised meat processing volumes decline and international meat prices continue to ease up. The Food and Agriculture Organisation of the United Nations’ meat price index in January 2013 dropped further by 1.2 percent on year earlier annual average, following months of flat growth and decline. Competition in the meat exports market also heats up as Australia takes a bigger size of the Chinese meat market, a major market for New Zealand.
Annual imports also dropped 1.0 percent year-on-year. The contraction in import spending came following months of weak growth with New Zealand importing fewer airlines and other transport equipment. Consumer import spending was also flat. However, annual plant imports were up 7.4 percent from last year, partly offsetting the fall in transport equipment.
Usual suspects contributed to the country’s weak trade performance. Falling world prices for dairy products, weak demand in major export markets and the strong New Zealand dollar proved too much of a barrier. While the value of the NZ dollar dropped in the latest trading period (from US $84.30 cents to US$82.52 cents), the dollar is still at a very high level. The current dry weather will further exacerbate the situation and we are likely to see milk production falling from February onwards.