New Zealand's current account deficit has narrowed to 2.4% of GDP for the year to March. The average market forecast was for a deficit of 2.7% of GDP.That though is probably as good as it gets for some time.To put the drop in context, the last time t
New Zealand’s current account deficit has narrowed to 2.4% of GDP for the year to March. The average market forecast was for a deficit of 2.7% of GDP.
That though is probably as good as it gets for some time.
To put the drop in context, the last time the deficit was this low was September 1989, at the depths of the late 1980s recession.
Since the 1973 oil shock, New Zealand’s current account has only improved during recessions.
The figure is also better than it would otherwise be because of the large wins by Inland Revenue against the Australian owned banks and the transfers they have had to make to the New Zealand government.
Strip those out and the current account deficit was 3.3% of GDP.
The good news in the figures – and there is some – is a surplus in the goods account of $919 million for the March quarter and $2.8 billion for the year, driven by an increase in both the value and volume of dairy ports.
Higher prices for forestry and non-food manufacturing also contributed to the rise.
The services balance was in deficit by $146 million for the quarter and $200 million for the year to March. Exports of travel services fell in March, reflecting a fall off in tourism numbers during the period.
Investment income showed its usual deficit – with a deficit for the year of $7.6 billion, a decrease of $5.4 billion from the previous year. For the quarter, the deficit fell $989 million, driven by an unanticipated improvement in income by New Zealand firms investing abroad.
This was not expected – virtually all forecasters anticipated an increase rather than a decrease in this area.
