Current account deficit widens in third-quarter

New Zealand's current account deficit widened in the third quarter as a seasonal fall in dairy exports and increase in Kiwis travelling abroad while imports rose.

The deficit was $4.68 billion in the three months ended Sept. 30 versus a revised second-quarter deficit of $514 million, Statistics New Zealand said. The annual deficit was $7.1 billion, or 2.6 percent of gross domestic product versus an annual deficit of $7.14 billion, or 2.7 percent of GDP, in the prior year. The annual current account deficit has remained between 2 percent-and-4 percent of GDP since 2010, Stats NZ said.

The figures were largely in line with expectations as economists had expected a third-quarter deficit of $4.2 billion and an annual deficit of 2.5 percent of GDP, according to a Bloomberg poll.

"Travel seasons and the seasonality of New Zealand's main export commodities mean current account deficits are generally more likely in the September quarter, when dairy exports are lower and more New Zealanders travel overseas," Stats NZ said.

The biggest quarterly movement was in the goods balance, which showed a deficit of $2.2 billion in the third quarter versus a surplus of $1 billion in the second quarter. Exports were $12.1 billion while imports were $14.3 billion, compared to a revised $14.3 billion and $13.3 billion respectively three months earlier.

The services balance showed a deficit of $51 million versus a surplus of $788 million in the prior quarter as services imports were slightly higher than services exports.

The financial account balance showed a surplus of $2.2 billion in the three months to Sept. 30 versus a revised surplus of $610 million in the prior quarter.

The balance on the capital account was a $14 million deficit in the September quarter versus a revised $95 million surplus in the prior quarter.

Foreign investment in New Zealand was $257 million in the September quarter versus a revised $1.7 billion in the three months to June 30.

New Zealand's net international liability position was $156.7 billion or 56.3 percent of GDP as at Sept. 30 from a revised $157.2 billion or 57.4 percent of GDP at June 30.

The value of New Zealand's international assets was $245.1 billion as at Sept. 30, down $4.3 billion from the three months to June 30.

The net external debt position - excluding financial derivatives and equity - was $150.6 billion or 54.1 percent of GDP at Sept. 30 versus a revised $148.2 billion or 54.1 percent of GDP at June 30. The net position widened because the external debt increased $4.9 billion while external lending increased $2.5 billion. This was due to more borrowing from the banking sector, Stats NZ said.

(BusinessDesk)