New Zealand's trade deficit smallest in 8 years in January (Updated)

New Zealand recorded its smallest January trade deficit in eight years, as the value of merchandise imports fell 0.9% to NZ$3.36 billion and the value of merchandise exports rose 3% to NZ$3.18 billion, figures released by Statistics New Zealand (Stats NZ) showed. (Updated to include JP Morgan comments.) The monthly trade balance was a deficit of NZ$187 million, or 5.9% of exports. The annual trade balance for the year ended January 2009 was a deficit of NZ$5.5 billion, or 12.8% of exports. Stats NZ said this was smaller than the average deficit for the preceding five years, which was 15.7% of exports. "This month's fall in imports was led by a NZ$105 million decrease in the value of passenger motor cars, with significantly fewer cars being imported," Government statistician Geoff Bascand said. "Over half of this decrease came from reduced values of used cars with petrol engine capacities between 1500 and 3000cc. The largest increase in imports was from a NZ$91 million rise in petroleum and products, led by an increase in crude oil quantities," Bascand said. "This month's increase in exports was led by rises in the value of preparations of cereals, flour and starch (up $52 million); and casein and caseinates (up $50 million). The largest offsetting decrease was from a $214 million fall in crude oil, resulting from both decreased prices and quantities," he said. By country, New Zealand imports from Japan fell by a fifth in January from the same month a year ago. Imports from Australia were down 12%, and from America were up 10%. Exports to Australia fell 10% and exports to China more than doubled. "The worsening outlook for the global economy means there are tough times ahead for Kiwi exporters, even though the weaker NZD will soften the blow," JP Morgan economist Helen Kevans said. "The marked deterioration in conditions in the country's dominant trading partners is the largest headwind facing the nation's exporters. Over the past month, J.P. Morgan has downgraded growth forecasts for Australia, the US, Japan, and China "“ New Zealand's four largest export destinations "“ meaning that net exports will remain a significant drag on growth in 2009," Kevans said.