New Zealand's October trade deficit narrowed slightly, in line with expectations.
The October goods trade deficit was $1.7 billion in actual terms versus $2.3b in the same month a year earlier.
October exports were down 9.3% to $5.4b, while imports fell 14% to $7.1b.
Milk powder, butter and cheese led the fall in exports. Infant formula, however, rose 17% to $240 million.
The annual trade deficit for the year ended Oct 31 was $14.8b, made up of $69.7b of exports and $84.5b of imports, down 1.7% and 0.3%, respectively.
Sabrina Delgado, economist at Kiwibank, said the October trade data came in line broadly with expectations and noted exports are still on a downward trend.
“That’s no surprise. A slowing global economy and softer trading partner growth, particularly from China, our largest trading partner, results in weaker demand for our exports.”
She said the most important thing to watch is China, which is a key downside risk to the Kiwi economy.
“If the ongoing slowdown in China hurts exports and growth more than the RBNZ expects, then we very well could see a lowering of the OCR sooner than they’ve signalled,” she said.
Exports to China fell 18.5% in October versus the same month a year ago.
In the 12 months to the end of October, exports to the Asian giant were down 7.4%. Some $18.96b of total annual goods exports went to China.
On the import side, higher interest rates are slowing the domestic economy, leading to a pullback.
“Going forward, we continue to expect to see these similar themes across our imports and exports as a high-interest rate environment remains both domestically and globally.
“Imports should continue to fall, while our exports may face sluggish growth.”
