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Michael Gordon, analyst at Westpac, points out that the New Zealand recorded a small trade surplus of $12m in February as exports bounced back from an unusually weak January.

Key Quotes

“In seasonally adjusted terms, exports rose by 7.7% in February, reversing most of an 8.6% decline in January. There were large gains in dairy, reflecting the strong growth in milk production during spring and early summer, and a rebound in meat exports.”

“Imports were up 0.7% in seasonally adjusted terms. Oil import volumes pulled back from an elevated level, while imports of capital equipment and consumer goods remained strong.”

“The annual trade deficit widened further to $6.62bn, the largest since July 2006. Export earnings have been growing modestly, and will soon receive a further boost from the sharp rise in dairy prices at recent auctions. However, the growth in exports has been outweighed by a strong rise in imports, reflecting the growth in domestic demand. Higher oil import prices also played a role over 2018, but they have eased back in recent months. We expect the trade deficit to narrow again by the end of this year.”