New Zealand’s September Trade Deficit Widens Sharply, Exceeding Forecasts

• New Zealand’s September trade deficit hit NZ$1.971 billion, far exceeding forecasts.
• Increased imports of EVs and mobile phones from China contributed to the deficit.
• Data is a modest negative for NZD and adds hawkish pressure on RBNZ.

New Zealand’s merchandise trade deficit for September significantly widened to NZ$1.971 billion, substantially exceeding market expectations of NZ$775 million and the revised August deficit of NZ$1.536 billion. Exports saw a 12 percent year-on-year increase to NZ$6.47 billion, but this was outpaced by a surge in imports. The widening deficit was partly driven by increased imports of electric vehicles and mobile phones, particularly from China, with elevated global oil prices also noted as a potential factor for import costs. This larger external deficit is considered a modest negative for the New Zealand dollar (NZD), implying greater reliance on foreign funding. For the Reserve Bank of New Zealand (RBNZ), the data introduces a hawkish consideration of imported inflation, potentially offsetting signals from soft domestic demand and keeping further monetary tightening on the table, despite market anticipation for a pause at the October 28 meeting.