The impact of sagging dairy prices and the economic slowdown in China is apparent in New Zealand's latest monthly merchandise trade figures, which show a bigger than expected deficit of $1.1 billion.
A deficit was expected for July, but this is larger than economists were forecasting.
According to Stats NZ the latest gap between the value of goods we exported and the goods we imported gave us 12-month running deficit of $15.8 billion. That's large, but it is actually down on the record 12 month deficit that was hit in May this year of $17.1 billion. It is, however, up on the $12 billion deficit at the same time a year ago.
Stats NZ describes the overseas merchandise trade statistics as providing information on imports and exports of merchandise goods between New Zealand and other countries, while the balance of payments figures (including the current account) record the total value of all the country's transactions with the rest of the world.
The most recent figures showed that our current account deficit dropped in March to $33 billion, which meant that it was now 8.5% of GDP, down from 9% in December. That's still very high and will be being watched by the international credit rating agencies.
But back to the latest merchandise trade figures, Stats NZ said that in July goods exports fell $890 million (14%), to $5.5 billion while goods imports fell $1.2 billion (16%), to $6.6 billion, giving the monthly trade deficit of $1.1 billion. The figures are rounded.
In terms of the detail in the export figures when compared with the same month a year ago, milk powder, butter, and cheese (our largest export commodity group) fell by $350 million (19%), to $1.5 billion. Also notable was that meat and edible offal exports fell by $194 million (21%) to $712 million.
Compared with the same month a year ago our total exports to China were down some $407 million (24%). Notable falls in that were: meat and edible offal, down $176 million; preparations of milk, cereals, flour, and starch, down $96 million; milk powder, butter, and cheese, down $64 million.
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