(Bloomberg) -- New Zealand posted its smallest annual trade deficit in more than two years as a weak economy curbed demand for imports.
The shortfall was NZ$9.1 billion ($5.5 billion) in the 12 months through September, Statistics New Zealand said Tuesday in Wellington. That’s the narrowest since March 2022 and compares with a record NZ$17.1 billion deficit in May last year.
New Zealand typically runs an annual trade deficit as it needs to import oil, transport equipment and many raw materials that aren’t produced locally. However, the cumulative impact of high interest rates through 2023 and much of 2024 has stalled economic growth and resulted in a slump in business investment.
The Reserve Bank began easing monetary policy in August and the decline in imports is showing signs of stabilizing after reaching the lowest level in two years in June.
Imports in the 12 months through September fell 8.4% from a year earlier to NZ$78.5 billion but were little changed from August.
Annual imports of plant and machinery fell 11% from the year-earlier period, while passenger vehicle imports slumped 23%.
The result suggests the current account deficit, a broader measure of trade that includes investment flows and services such as tourism, will narrow further. The gap was NZ$27.6 billion or 6.7% of gross domestic product in the year through June, having reached a record 9.4% of GDP at the end of 2022.
The trade deficit is narrowing even as annual exports also slow. The value of overseas shipments was NZ$69.4 billion in the year through September, down 1.2% from a year earlier.
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