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The current account deficit in New Zealand remained nearly unchanged during the third quarter of this year, in line with what markets had initially anticipated. Looking ahead, the goods balance is set to improve over the remainder of this year and into next as the surge in dairy prices since mid-year begins to be reflected in export receipts.
New Zealand’s annual current account deficit was unchanged in the September quarter, remaining at 2.9 percent of GDP. The details of the release were also in line with expectations, data released by Statistics New Zealand showed Thursday.
There was a deterioration in the goods deficit (in seasonally adjusted terms) on the back of softer agricultural exports while the services balance was broadly unchanged from June levels and remained firmly in surplus territory. The annual investment income deficit narrowed a touch reflecting lower profits for overseas-owned firms in the quarter.
The net international liability position widened further in the September quarter, to 64.9 percent of GDP. This at least in part reflects the changing tide in New Zealand’s borrowing and savings position. Over the course of 2016, household borrowing has been accelerating, outstripping deposit growth and increasing the need to borrow from offshore.
"We also expect the services balance to remain firmly in surplus territory going forward. There’s little sign that New Zealand is falling out of favour with international visitors any time soon. And while capacity constraints mean we won’t see the same pace of growth in visitor arrivals (and service exports) going forward, exports of services look set to remain a positive feature of New Zealand current account for some time yet," said Sarah Drought of Westpac Research.
Meanwhile, NZD/USD traded at 0.6912, up 0.22 percent, while at 6:00GMT, the FxWirePro's Hourly NZD Strength Index remained neutral at -45.40 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex
