The country has posted its second biggest monthly trade deficit on record as a fall in exports outpaced lower imports.
Dairy, meat and fruit exports dropped in August, contributing to an almost 9 percent earnings fall. Photo: Wikicommons
Official figures show a deficit of $1.26 billion in August - the biggest since September 2014 - and the annual deficit widened to $3.1bn.
Export earnings for the month were down nearly 9 percent on a year ago because of a fall in dairy, meat and fruit exports.
The fall in imports was about a third of the export decline, driven by lower transport equipment, oil, and machinery.
A deficit at this time of the year was usual, because agricultural production and export sales were yet to get into full swing, but economists had been expecting a deficit of about $765 million.
"This year exports have been affected by particularly low carryover inventory levels for dairy and red meat, as well as lower new season production," said ANZ rural economist Con Williams.
Leaving aside volatile oil imports and expensive one-off items such as new aircraft, there was increased spending on vehicles and household consumer goods, which were signs of a buoyant domestic economy, he said.
Mr Williams said the level of the New Zealand dollar would be an important factor in whether the trade balance improved.
A lower currency would boost export returns, but make imports more expensive.