-Nathan Penny, rural economist at ASB
New Zealand's trade balance unexpectedly swung to a surplus in January for the first time since June last year, as the impact of falling oil prices outweighing the effect of low dairy export prices. According to Statistics New Zealand, the trade surplus came in at NZ$56 million in the reported month, following the revised deficit of NZ$195 million in December. In January last year the trade surplus stood at NZ$285 million. Exports plunged 9.1% on the year in January to NZ$3.7 billion, and dropped from NZ$4.40 billion in December, due to falling milk powder prices over the last five months compared with the previous year, even as exported quantities of the dairy products and meat jumped to record levels for a January month. Imports, in the meantime, declined to NZ$3.64 billion from NZ$4.58 billion in December and fell from NZ$3.78 billion a year earlier. Sharp falls in oil prices saw the value of imported crude oil plummet 31%, or NZ$115 million, to NZ$254 million.
The New Zealand economy will grow by about 3% this year, despite slowing demand from its main export destinations of China and Australia, NZIER estimated. Domestic demand would be robust, whereas sluggish in China and Australia would undermine exports. Inflationary pressures will remain soft, as New Zealand would import low prices from overseas, while domestically-generated consumer price inflation would remain subdued.
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