New Zealand's current account deficit likely to widen over next year

New Zealand's current account deficit reduced modestly in September to 3.3% of the GDP in the year. The results were consistent with consensus expectations.

The deficit remained unchanged in last year, even if there was a steep decline in dairy exports prices. Other commodities more favorable prices, export volumes growth, and solid rebound in tourist spending have counter balanced substantially.

While the deficit is seen widening over next year as the low dairy prices have full impact, it is likely to remain well-contained compared to the last economic cycles.

This release's details do not provide any insights into tomorrow's Q3 GDP report further.

"Exports will make a positive contribution to growth, but we suspect that much of this will come out of inventories. We continue to expect a solid 0.9% increase in GDP, after two quarters of weak growth", says Westpac in a research note.