New Zealand Trade Deficit Leaps on Falling Global Demand

December saw New Zealand’s Trade Balance deteriorate by 347.0M, forcing annual deficit into record territory. The deficit itself widened more than economists had expected, to NZ$5.5 billion. Gains in imports outpaced that of exports in 2008 as the country’s key trading partners saw their demand for foreign goods plummet. On the year, imports rose NZ$48.53 billion while exports rose only NZ$42.92.

Yesterday saw the Reserve Bank of New Zealand slash its overnight cash rate by 150 basis points to 3.50%. With the bank stating that they would continue their monetary easing, the New Zealand Dollar may continue to suffer against other currency. A weak kiwi, however, may revive its export sector as domestically produced goods become more affordable to those living abroad.

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