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Exports leapt higher in September, led by a strong recovery in dairy exports following trade disruptions in August caused by the Fonterra contamination scandal.
Statistics New Zealand figures released on Thursday show the September trade balance was a deficit of $200 million compared to market expectations of a $680 million deficit. The annual trade balance was a deficit of $1.2 billion.
ASB economist Jane Turner said looking beyond trade disruptions, dairy exports were strong.
The trade disruptions saw seasonally adjusted export volumes fall 9% in August, but exports surged 22% in September.
Third-quarter dairy exports increased 20% in value on the previous quarter. With reports of a strong start to the season, and elevated global prices, the outlook for dairy exports was encouraging, she said.
Also contributing to a quarterly export performance was an increase in forestry exports, up 23%, and meat exports, up 7.6%.
Manufactured exports also performed well in the quarter but weakened in September, she said.
Third-quarter imports lifted strongly, led mainly by a surge in capital goods which were boosted by the one-off import of an oil-drilling platform in August and helicopter imports in July. Consumer imports rose 4% in the quarter, an indication domestic demand remained firm.
Ms Turner said the strong rebound in dairy exports highlighted the strong fundamentals for the sector in the coming season. ASB expected dairy incomes would increase by more than $4 billion in the coming season.
She warned that although trade disruptions of the Fonterra whey contamination scandal were short-lived, the reputation effects could be longer-lasting.
Strong dairy exports should lead an improvement in the trade balance this year, but an increase in imports as the economy continued to improve would limit that.