New Zealand experienced a notable decline in imports in the first quarter, marking the lowest levels since mid-2021. This downturn reflects a subdued economy, where both consumers and businesses are curbing their demand, Bloomberg reported citing official statistics released on Wednesday. According to Stats NZ's report released, imports totaled NZ$17.9 billion ($11 billion) during the three months ending in March. This figure represents the weakest performance since the period concluded in July 2021, a significant drop from the peak exceeding NZ$25 billion observed in late 2022. The deceleration in import demand mirrors the sluggish economic conditions, exacerbated by elevated interest rates impacting both households and businesses. The country's gross domestic product (GDP) experienced contraction in the latter half of 2023, leading to a double-dip recession, with a recent business sentiment survey underscoring the looming risk of a sharp economic downturn in 2024. The Reserve Bank opted to maintain the Official Cash Rate at 5.5 per cent this month, emphasising the necessity of sustained restrictive monetary policy to steer inflation back within the 1-3 per cent target range. Consumer prices rose by 4 per cent in the year up to March. Today's report indicates broad-based declines across most import categories, with vehicles witnessing an 18 per cent drop from the same quarter last year, machinery declining by 12 per cent, and fuel plummeting by 29 per cent. Capital goods imports experienced a sharp 25 per cent decline, reflecting businesses' reluctance to invest amid dwindling confidence. March saw a drastic 25 per cent decrease in imports compared to the preceding year, although the prior period included the purchase of a jetliner and unusually high fuel shipments. Imports for the year ending March 31 registered an 11 per cent decline compared to the previous year, outpacing a 4.2 per cent decrease in the value of exports. Consequently, the annual trade deficit narrowed to NZ$9.87 billion, marking the smallest deficit since May 2022.
