Exports surge to record

New Zealand’s exports rose to a record high in 2017, as China extended its lead as New Zealand’s largest trading partner.

Figures released yesterday showed total annual exports hit $53.7 billion in 2017, up 11 per cent on 2016 and beating the previous record of 2014.

Imports also climbed, up 9.4 per cent to $56.5b, creating a trade deficit of $2.8b, the lowest in three years. The gap narrowed in December, the strongest month for exports of all time.

Almost half of the annual growth came from China, which has been New Zealand’s largest export destination since 2013 when it overtook Australia.

Exports to China were marginally less than $12b in 2017, an increase of 27 per cent over the previous year. Exports to Hong Kong also surged, up 55 per cent to $1.2b, making it New Zealand’s seventh largest trading partner.

Australian exports grew more modestly, up 6.5 per cent to $8.8b.

China was also New Zealand’s largest source of imported goods, totalling $10.9b, a 5.7 per cent increase in 2016.

Economists had expected a larger trade deficit, with December’s trade balance showing exports exceeded imports by $640 million, well ahead of the monthly deficit the market expected.

The figures caused the New Zealand dollar to jump marginally.

‘‘The main surprise was a surge in exports to a new record high, though this is likely to be shortlived,’’ Westpac senior economist Michael Gordon said.

‘‘Exports rose by 13 per cent in seasonally adjusted terms in December, setting a new monthly record by quite some margin,’’ he said.

Led by a surge in dairy exports, up 12 per cent, the increase is expected to decline as recent dry weather weighs on volumes.

ASB said it expected the trade deficit to decline further in 2018.

‘‘That said, we expect the volatility in trade data to continue as weather continues to throw around agricultural production and exports.’’