New Zealand’s current account deficit likely to have narrowed in Q1

New Zealand’s national accounts for the first quarter are likely to be slightly strong but not spectacular. The current account deficit for Q1 2016 is expected to have slightly contracted to three percent of the GDP, said Westpac in a research report. This will make it the smallest deficit since September 2014. The sharp decline in global dairy prices has adversely impacted export earnings in the past two years; however, there have been countering positives in that time as well.

In the previous quarter, there were two main factors leading to narrowed deficit. The renewed decline in global oil prices lowered the country’s import bill that resulted in contraction of the goods trade deficit. Secondly, the foreign tourist numbers have continued rising sharply in 2016.

Therefore, the services trade surplus in seasonally adjusted terms is likely to reach $1 billion for the first time. Moreover, investment income deficit is likely to narrow slightly, added Westpac.