30 Jan 2013

Economist predicts exporters to face tough year

8:28 am on 30 January 2013

An economist says a modest recovery among New Zealand's main trade partners combined with an appreciating New Zealand dollar will continue to restrict export returns.

The trade balance slipped to a $87 million deficit in the three months to December led by a fall in dairy exports and weaker manufacturing exports because of lower demand from Australia and the US.

On an annual basis the deficit stood at $1.2 billion in 2012.

ANZ Bank senior economist Mark Smith says the deficit is set to widen, in part because demand for imports to help rebuild Christchurch and the high New Zealand dollar will continue to weigh on exporters.

He says the pressure on exporters is compounded by the dollar's strength against a wide range of export market currencies.

However, Mr Smith says the widening deficit is likely to be curbed by subdued consumer demand and unemployment of more than 7%.