January trade deficit $791 million

Photoshopped image credit: Pixy

Seeing that our finance minister Grant Robertson does not know the difference between capital and income, this latest blow to the economy will probably not bother him; but it should bother everyone else. The trade deficit for the month of January was $791 million, more than twice what was expected. quote.

New Zealand recorded its highest January deficit on record and the seasonally adjusted deficit was also more than double what economists had been expecting as a fall in exports outstripped their forecasts.

The January trade deficit was a seasonally adjusted $791 million, as exports fell 7.8 per cent on the year to $4.65 billion and imports lifted 0.4 per cent to $5.44b, Stats NZ said.

Economists had been expecting a $300m deficit in January, with exports tipped to be $4.8b and imports seen at $5.05b, according to a Bloomberg poll.

In actual terms, the deficit was $914m, surpassing the previous record of $894m in January 2006. Stats NZ noted, however, that as two-way goods trade has nearly doubled since then the January 2019 deficit is equal to 9.0 per cent of two-way trade compared with 17 per cent in 2006. end quote.

Nothing alters the fact though that this is bad news for the economy. There could be many reasons for it, and global trade issues almost certainly play a part. Falling out with our biggest trading partners doesn’t help either. quote.

In actual terms imports rose 7.7 per cent to $5.3b while exports rose 3.0 per cent to $4.4b.

Stats NZ said the increase in imports was spread across a range of commodities, with petroleum and products leading the rise ? up $81m, or 13 per cent on the year.

The lift in exports, meanwhile, was led by milk powder, butter, and cheese ? up $167m to $1.5b. Exports of milk powder, butter and cheese to China rose $9.1m from January 2018, to reach $200m. end quote.

So we are importing more petroleum products, in spite of the oil and gas ban. We expected this would be the outcome, but nobody thought it would happen quite so soon. quote.

The largest fall in exports was for meat and edible offal, down $66m in January 2019 from January 2018. Lamb exports were down $26m, while beef exports fell $28m.

Exports of lamb to the EU were at their lowest January value since 2006, it said.

The annual deficit was $6.36b versus an annual deficit of $6.11b in the prior year. Economists had expected a deficit of $5.5b, according to the poll.

A Newspaper END QUOTE.

That is almost $1 billion more in deficit than expected. That is really significant.

At a time when the government is proposing new taxes, the economy is starting to tank. Everyone knows that tax is a disincentive at the best of times and what is more, when things get tough in the economy, there are generally fewer start-ups anyway. Add Capital Gains Tax into the mix and a lot of people simply won’t bother taking the risks. We really do have a bunch of incompetent fools running our country at present.