The NZ Herald reports today that the trade deficit for the year to January is 23% of export receipts compared with an average for January of 7.8%. Imports increased by 3 Billion to 37.9 Billion. This implies that exports were 37.9 / 1.23 = 30.8 B. The deficit for the month of January alone was 42.6% !
The trade deficit maybe isn’t as important as the current account deficit, which also takes account of non-trade capital flows (e.g. investment flows), but the trade deficit is an important component of that. The article doesn’t give the latest info on the current account, but quotes the September figure as 12.9 B or 8.5% of GDP.
How does this compare with the rest of the world? The Washington Times reports today that the US trade deficit for 2005 is estimated to be 726 B (5.8% of GDP) and the current account deficit for is estimated to be 840 B. This implies that as a fraction of GDP the current account deficit is 840 / (726 / 0.058) = 0.067, i.e. 6.7%. The 2005 GDP itself is (726 / 0.058) = 12,517 B
The same article discusses concerns about the US deficit situation. One view is that as long as the deficit is less than the growth in GDP everything is ok. In the US GDP growth in 2005 is estimated to be 745 B, which is more than the trade deficit of 726 B but less than the current account deficit (840 B).
What about NZ? Well we don’t have the December GDP numbers, but Scoop reported in December that GDP growth for the year to September was 2.7%. Compare this with the current account deficit to September of 8.5% and you don’t get a pretty picture. Now factor in a 23% trade deficit for the January year. It will be interesting to see the fallout.