With no clear resolution to the euro zone debt crisis likely in the first half of the year, New Zealand's export performance was likely to weaken, ASB economist Jane Turner says.
Commenting on the latest trade balance figures released by Statistics New Zealand, Ms Turner said New Zealand's trade held up relatively well in November, despite a 5% fall in the month.
As expected, there were some falls in forestry and aluminium reflecting weaker global demand.
"However, it was encouraging to see manufactured exports holding up well and dairy exports increasing strongly over the month."
New Zealand's strong export performance over the past year had been largely underpinned by strong prices for meat and dairy, she said.
Prices continued to hold up, despite the increased uncertainty from offshore.
More weakness in forestry and manufactured goods was expected in the future as those sectors were more sensitive to global growth, Ms Turner said.
Trading partner demand had started to ease as uncertainty around the euro zone outlook weighted on activity.
Reviewing the November figures, Ms Turner said the November trade balance was in line with market expectations with a $308 million deficit. Seasonally adjusted, the trade balance registered a small surplus of $54 million, down from the strong surplus of $252 million in October. The weaker surplus was due to a 5% seasonally-adjusted fall in exports in the month.
The fall in exports was due to lower export volumes of meat, forestry, oil and aluminum.
The fall in meat likely reflected constrained supply.
"Anecdotally, farmers may be holding back on slaughter to take advantage of good grass growth over late 2011. The decline in volumes of meat exports was somewhat tempered by continued increases in prices."
More concerning was the fall in forestry and aluminium as both reflected weaker trading demand.
Dairy exports surged in November, offsetting dips in the previous two months.
Fruit exports increased strongly during November. Statistics NZ noted that green kiwifruit exports were up $18 million compared with the previous corresponding period. The increase was largely due to timing, as this season's kiwifruit exports started and finished later, compared with the previous year, Ms Turner said.
