NZ imports up but that’s good news

In New Zealand the May trade surplus figures were down on market expectations – $650m instead of the forecast $1,000m – as imports were higher than expected. One would think that more imports is bad news for the economy but it depends on what is actually being imported. From the graph below the increase in capital goods and industrial supplies is good news for the economy as it starts to rebound with a potential increase in GDP growth. There was strong annual growth coming through plant and machinery (ex transport goods), which was up an annual 21%, and industrial supplies (excluding oil), which expanded nearer 30% y/y. Imports of consumer goods were not keeping pace with previous quarters – consumer goods are finished goods and don’t tend to add to the GDP of an economy.

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