Imports of fuel drive imbalance

NEW Zealand’s rate of imports are rising much faster than exports, which was reflected in the largest trade deficit book for any January, of $914 million.

Much of the deficit was increased petroleum and products imports, which were unseasonably high.

Westpac had predicted a $500 million deficit while ASB and the market had expected $300 million.

StatsNZ international statistics manager Tehseen Islam said for January imports rose by $379 million, or 7.7%, on a year ago to reach $5.3 billion.

Exports were up by $128 million, or 3%, to reach $4.4 billion, he said.

Twoway goods trade, of imports and exports, had almost doubled since January

2006.

‘‘While there was a large deficit in January, monthly deficits typically peak at even higher levels in August and September, when dairy exports are relatively low,’’ Mr Islam said.

ASB chief rural economist Nathan Penny said the

$914 million was bigger than expected, saying the volatile petroleum and products component accounted for much of the surprise, against expectations.

‘‘We put this surprise down to the timing of shipments as oil prices were significantly lower than a year ago,’’ he said.

Westpac senior economist Michael Gordon said most of the surprise was due to weaker exports, down 7.8% in seasonally adjusted terms.

‘‘Commodity exports performed largely as we expected, with gains in dairy and wood products against a fall in meat exports,’’ he said.

Imports were largely in line with Westpac’s forecast, except for the purchase of a large aircraft worth about $200 million, which Mr Gordon had expected to be recorded in February date.

He noted oil import volumes had remained high in January.

The lift in exports was led by

milk powder, butter, and cheese, up $167 million to $1.5 billion. Exports of milk powder, butter and cheese to China rose $9.1 million from January 2018, to reach $200 million,

The largest fall in exports was for meat and edible offal, down $66 million in January 2019 from January 2018.

Lamb exports were down $26 million, while beef exports fell $28 million.

Export levels of lamb to the European Union were at their lowest January monthly value since 2006, the statistics revealed.

PHOTO: STEPHEN JAQUIERY Fuel fuelling deficit . . . Petroleum and relatedproducts imports blamed for much of the record January trade deficit; pictured a jogger on the Ravensbourne cycle track passes the oil tanker Matuku, shadowed by tug Otago, departing Dunedin’s upper harbour.