New Zealand's trade deficit is ballooning further, as exports continue to struggle and imports continue to increase. The annual deficit for the year to May was $801 million, up $248 million from the deficit for the year to April.
The trade deficit for the year to May represented 1.7% of exports. Annualised exports stood at $46.4 billion, while imports for the year to May was $47.2 billion. Imports are also rising faster than exports. Compared with May 2011, imports were up 5.6%, while exports were up only 1.2%. The strong growth in imports was driven by crude oil (up 23.2%), capital (up 7.5%), and motor vehicle (up 10.2%) imports.
Softer export receipts since November 2011 were due to lower demand for New Zealand exports and weaker prices for key commodities. In particular, meat, logs, wood products, and dairy prices were well below their peak, resulting in lower year-on-year receipts. Year-on-year changes show that receipts from meat, forestry, and dairy were down 4.2%, 9.5%, and 2.7%, respectively.
Looking at the monthly figures, the May trade balance was a surplus of $301 million. Exports increased over April by 14% to $4.4 billion, while imports rose 16% to $4.1 billion.
Weaker export prices and the relatively strong NZ dollar continue to make prospects for the NZ external sector difficult.