While the $269 million decline in the trade deficit was welcomed, economists believe the recovering economy and subsequent increased imports will dampen further improvements during the year.
The trade balance - the difference between the country's imports and exports - reflected the value of both merchandise imports and exports falling in November last year compared to the previous year, down respectively 22% and 16.7%, according to Statistics New Zealand.
It was the eighth consecutive monthly fall for imports and the sixth consecutive month during which exports had fallen, compared with the corresponding month of the previous year.
ASB economist Jane Turner said the trade balance posted a deficit of $269 million in November, bringing the annual trade deficit down to $846 million from the month before.
"The sharp improvement in the trade balance during the past year mostly owes to the sharp drop in import values, due to very weak domestic demand, compared to a more muted decline in exports," she said in a statement yesterday.
While the narrowing traded goods deficit contributed positively to the smaller current account position over the past year, the improvement came largely from lower imports, as a result of falling domestic demand during the recession.
"As the New Zealand economy begins to recover during 2010, import demand is likely to pick up and limit further improvements in the trade deficit," Ms Turner said.
Figures showed dairy exports remained 25% below year-ago levels, due to the sharp decline in dairy prices in the wake of the financial crisis.
"[However] More recently, dairy prices have begun to recover on spot markets, which has boosted the value of dairy exports over the past few months," Ms Turner said.
The largest rise in exports was in crude oil, which lifted $86 million or 11.7%, with quantities more than double those of November 2008, but crude oil shipments could be irregular, NZPA reported.
Among imports the largest fall was in the intermediate goods category, which fell $741 million or 33.9%, with widespread falls in the category, with crude oil down $125 million or 35.9%, mainly due to lower prices, Statistics New Zealand said.
Ms Turner said oil exports were up 89% on year-ago levels, although the increase was exaggerated by the irregular timing of oil shipments not accurately reflecting longer-term patterns.
"Nonetheless, the underlying trend in oil exports has been improving as the Maari oil field has increased production over the second half of 2009 and oil prices have recovered considerably from lows in late 2008," she said.
