24 Jul 2020

Dairy and log exports drive up June trade surplus

2:00 pm on 24 July 2020

The country has recorded its fifth consecutive monthly trade surplus with the annual deficit falling to its lowest level in nearly six years.

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Photo: 123RF

Official figures from Stats NZ show a trade surplus of $426 million for June, taking the annual deficit down to $1.2 billion, the lowest since late 2014.

Trade surpluses are usual for this time of year as agricultural produce sales hit highs on overseas markets.

Dairy produce and logs drove export earnings to $5.1 billion dollars for the month, while imports were $4.6bn, up on the month before but flat on a year ago.

The Covid-19 pandemic and lockdown have dampened activity and reduced demand, particularly for vehicles and fuel.

The import bill was boosted by the one-off purchase of a naval ship, HMNZS Aotearoa, without which the trade surplus would have been $821 million.

ASB senior economist Mark Smith expected the current pattern of solid demand for exports and reduced imports to continue in the near term.

"We expect a period of very low annual trade deficits, and potentially trade surpluses, over the year ahead."

"The environment for trade, however, will likely remain difficult as the global economy grapples with a global pandemic and the surfacing of increasing protectionist sentiment," he said.

The strength of exports, particularly agricultural products, are expected to support economic activity this year and go some way to offsetting the loss of overseas tourists and students.