New Zealand's trade deficit continued to shrink last month as the value of imports and exports declined at their fastest pace in 21 years.
Statistics New Zealand overseas merchandise trade figures released today show the balance of trade deficit for October at $487 million from a revised $563 million deficit in September and a $994 million deficit a year earlier.
The value of merchandise exports in October tumbled 22 per cent to $3 billion from the same month a year earlier, the sharpest fall since the series began in 1988. The value of imports sank 28 per cent to $3.5 billion in the longest period of decline and the largest drop in 21 years.
"Over the past year smaller than usual trade deficits and a string of surpluses have helped drive a sharp improvement in the annual trade balance," said ASB economist Jane Turner.
Still, she doubts the trade balance will keep its gains as "import demand has now stabilised and volumes are likely to soon recover in line with domestic demand. Meanwhile the export outlook remains subdued with the high NZD hampering exporter's ability to remain a competitive."
The kiwi dollar has surged almost 50 per cent from its sub-50 US cents low in March, and recently traded at 71.16 cents from 71.58 cents immediately before the release.
Declining exports have been tempered by New Zealand's free trade agreement with China that has stoked demand for goods between the nations. Over the past 12 months, imports from China have gained 2.6 per cent to $6.3 billion worth of goods, while exports have soared 55 per cent to $3.6 billion.
Dairy exports lead the decline in export value, tumbling $318 million to $677 million, from 2008, though the quantity exported rose 36 per cent, while casein and caseinates sank $45 million to $58 million. Oil dropped $138 million to $112 million.
Exports to Australian sank 19 per cent to $763 million in October, while sales to Japan declined $146 million $208 million and US exports dropped $82 million to $256 million.
Petrol and petroleum products led imports lower last month, tumbling $432 million to $444 million, followed by capital equipment down $178 million to $403 million and iron and steel down $113 million to $85 million.
