"The growing deterioration in New Zealand's external accounts virtually guarantees a credit downgrade post-election," Labour finance spokesperson Michael Cullen said today.

Dr Cullen was responding to the June balance of payments figures showing a $566 million increase in the current account deficit between the March and June quarters. The results reflected continued sluggishness in the export sector and strong import growth, especially in cars and consumption goods.

"The rating agencies have long been concerned about New Zealand's weak external position. There is little in this data to appease those concerns. Instead the evidence is of an unbalanced and uneven recovery," Dr Cullen said.

"What is needed is a stategy to relieve the economy's dependence on commodity production. Labour will provide this leadership through policies such as our industry assistance policy.

"Among other initiatives, this will include better resourcing for TradeNZ and the development of an export credit guarantee scheme. New Zealand is one of the very few major trading countries without such a facility," Dr Cullen said.

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