Current account deficit remains steady
New Zealand's seasonally adjusted current account deficit was steady at $2.6 billion in the March 2019 quarter, largely unchanged from the December 2018 quarter’s deficit, Stats NZ has revealed.
The current account balance records the value of New Zealand’s transactions with the rest of the world in goods, services, and income.
It is an important indicator of the economy’s health. New Zealand has a current account deficit when we spend more than we earn from our transactions with the rest of the world.
The current account shortfall in the March 2019 quarter was slightly smaller than the previous quarter. This was mainly due to New Zealand making more from overseas investments, while foreign investors made less in New Zealand. This resulted in a narrower primary income deficit this quarter.
A smaller goods deficit was offset by a fall in the services surplus compared to last quarter. The overall effect on the current account was small.
“New Zealand's current account deficit has remained fairly stable over the past four quarters, compared with the volatility seen during the last decade,” says international statistics senior manager Peter Dolan.
Significant global events can cause spikes in the current account balance as was seen during the global financial crisis and the dairy price boom.
Goods and services
Seasonally adjusted goods imports were down $76m and exports up $17m from the December 2018 quarter, resulting in a narrowing of the goods deficit to $1.1b.
The fall in imports was led by intermediate goods, with crude oil the largest contributor to the change. The increase in exports was driven by milk powder, butter, and cheese, following a fall in the December 2018 quarter.
The seasonally adjusted services surplus narrowed by $120m to $970m, with imports rising $85m and exports falling $36m.
Transportation imports were up $20m whereas the fall in exports was led by a decrease in spending by visitors to New Zealand, down $26m from the December 2018 quarter, and transport exports, down $17m.