Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


NZ current account gap widens less than expected

NZ current account gap widens less than expected, seen growing in 2011

Dec. 22 (BusinessDesk) – New Zealand’s current account deficit widened less than expected in the third quarter, though the gap is set to widen in 2011 as economic recovery spurs imports and profits for foreign-owned companies.

The deficit was $1.77 billion in the three months ended Sept. 30, from a gap of $987 million in the second quarter, according to Statistics New Zealand. The annual current account gap widened to $5.93 billion from $5.6 billion.

Economists had expected the quarterly deficit to grow to $2.3 billion and the milder deterioration may buy the nation some breathing space after Standard & Poor’s cut the outlook on the AA+ sovereign to ‘negative’, citing the external imbalances. The nation’s external position has improved because the weak domestic economy has kept a lid on imports and profits from foreign-owned firms, while commodity export prices have climbed.

“As the economy recovers, profitability improves and import demand lifts the current account will widen further,” said Jane Turner, economist at ASB, in a note.

The current account deficit amounted to 3.1% of gross domestic product, up from 3% in the previous quarter and compared to expectations of 3.4%.
Turner forecasts the deficit will reach 5.2% of GDP by 2012, still well below the recent peak in 2008 of 8.7% of GDP.

The New Zealand dollar barely budged after the report, trading at 74.27 U.S. cents from 74.33 cents immediately before the numbers were released.

The seasonally adjusted balance of payments position was a surplus of $35 million, a turnaround from the $1.9 billion deficit in the June quarter, largely reflecting the government statistician’s decision to recognise an estimated $1.7 billion of reinsurance inflows related to the Canterbury earthquake.

Economists say this could grow as the full extent of claims is known.

Excluding the reinsurance flows, the deficit would have widened to about 4% of GDP, ASB’s Turner says.

New Zealand's net international liabilities were little changed at $162.5 billion or 85.2% of GDP at Sept. 30, down from $163.1 billion, or 86.3% of GDP at June 30.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Retail: International Websites To Pay GST

New rules would be aimed at imported goods valued at or below $1,000. Customs would retain responsibility for collecting GST on imported parcels valued more than $1,000. More>>


High-Level Advice: PM’s Business Advisory Council Membership Announced

The Prime Minister’s Business Advisory Council brings together a mix of experts, six women and seven men with small to large business experience, from across New Zealand, to provide advice. More>>


Improving: Report Shows New Zealand Air Quality 'Good'

Our air 2018, produced by the Ministry for the Environment and Stats NZ, shows that while some previously known issues persist, progress has been made and levels of some pollutants are declining. More>>


Greenpeace: Govt Extends OMV Exploration Permit

The Government has just granted oil giant OMV a two-year extension to drill in the Great South Basin, despite issuing a ban on new oil and gas exploration permits in April. More>>


Collective Bargaining For Contractors: Working Group's Model For Screen Sector

A recommended model to allow collective bargaining for contractors in the screen sector has today been unveiled by the Government-convened Film Industry Working Group. More>>


Kauri Dieback: DOC Closing Tracks To Protect Trees

The Department of Conservation will close 21 tracks across kauri land to help prevent the spread of kauri dieback. An additional 10 tracks will also be partially closed and the open sections upgraded... More>>