The slower world economy is already having an impact on New Zealand with lower profits and dividends flowing to New Zealand. Those factors offset some of the improvement in the current account balance over the December quarter, National's Finance spokesman Bill English said today.

"The improvement in the deficit at the end of last year was largely due to the second ANZAC frigate dropping out of the year-to-date figures, and also due to the current high prices on the international markets for agricultural products.

"The short-term outlook is for continued improvement, with the deficit expected to improve back to 1999 levels over the next quarter or so.

"However, we remain concerned about the medium term outlook, with many forecasters now predicting a deterioration in the current account balance on the back of lower world growth reducing export volumes and prices.

"This highlights the need for continued focus on polices that will enhance our international competitiveness. On that front the current Government continues to take us backwards, with policies such as higher taxes and reregulation of the labour market," Bill English said.

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