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Current account deficit narrows to $2.4 billion

New Zealand’s seasonally adjusted current account deficit narrowed by $140 million to $2.4 billion in the June 2019 quarter, Stats NZ said today.

There were increases in a range of export commodities, while goods imports were little changed from last quarter. The seasonally adjusted services surplus narrowed slightly reflecting a fall in exports of services.

"With no large movements in our top exports, the smaller goods deficit was driven by a rise in other commodities including infant formula, crude oil, and aluminium," international statistics senior manager Peter Dolan said.

Trade steady compared with GDP and GNE

The value of New Zealand’s trade in goods and services with the rest of the world has increased over time.

“We would expect to see this kind of increase, given factors like inflation and population increases,” Mr Dolan said.

However, over the last 15 years, the value of exports as a proportion of gross domestic product (GDP) ranged from 26.6 percent to 32.0 percent, while the proportion of imports to gross national expenditure (GNE) ranged from 25.9 percent to 32.2 percent.

Exports are compared with GDP because both are measures of production. The ratio of exports to GDP was 28.3 percent in the year to 30 June 2019.

Imports are measured against GNE because both are measures of spending. In the year to 30 June 2019, the imports to GNE ratio was 28.2 percent.

Primary income balance steady

The primary income deficit narrowed by $32 million, or about 1 percent, in the June 2019 quarter. This is continuing the slow narrowing seen over the last two years.

The primary income balance measures how much non-residents earn on their investments in New Zealand, and the amount of income New Zealanders earn on their investments with the rest of the world. The types of investment on which income is earned varies. However, while the underlying components change, the total result is still a slight narrowing of the primary income deficit.

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