(Bloomberg) -- New Zealand posted its smallest annual trade deficit in almost three years as a weak economy curbed demand for imports.
Imports fell to NZ$78.3 billion ($44 billion) in the 12 months through November, after peaking at almost NZ$90 billion in mid-2023, Statistics New Zealand said Friday in Wellington. The trade deficit narrowed to NZ$8.2 billion, the smallest since January 2022.
Imports have declined as the New Zealand economy has stalled the past two years, culminating in a deep recession in the six months through September this year. High interest rates through 2023 and much of 2024 damped consumer spending and business investment, resulting in less demand for cars and machinery.
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.
The Reserve Bank began cutting interest rates in August and has been among the most aggressive of its peers with 50 basis-point reductions in both October and November. The RBNZ has signaled another 50-point in move in February, which economists expect will begin to revive domestic demand in 2025.
Annual imports of plant and machinery fell 5% from the year-earlier period, while passenger vehicle imports slumped 24%, today’s report showed.
The narrower trade gap suggests the current account deficit, a broader measure of trade that includes investment flows and services such as tourism, will narrow further from NZ$27 billion or 6.4% of gross domestic product in the year through September. It was a record 9.4% of GDP at the end of 2022.
A modest improvement in annual exports is helping close the trade deficit. The value of overseas shipments exceeded NZ$70 billion for the first time in 14 months, although it remains below the NZ$72.7 billion peak seen in mid-2023.
Overseas sales of dairy and meat products declined but there was a 35% surge in fruit exports, led by a 42% jump in kiwifruit volumes after a bumper harvest, the statistics agency said.
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