New Zealand's current-account turned to a surplus in the first quarter, bolstered by the services balance as tourism remained strong.
The unadjusted surplus was $182 million in the three months to March 31 versus a revised fourth-quarter deficit of $2.75 billion, Statistics New Zealand said. Economists polled by Bloomberg predicted a first-quarter current account surplus of $50 million.
In seasonally adjusted terms, however, the current account deficit was $3.1 billion in the March quarter versus a seasonally adjusted $2 billion deficit in the December quarter. According to Stats NZ, the seasonally adjusted deficit was the largest since the 2008 global financial crisis and was due to a drop in exports and record high imports.
Stats NZ said the annual deficit was $7.9 billion, or 2.8 percent of gross domestic product versus an annual deficit of $7.7 billion, or 2.6 percent of GDP, in the prior year. The annual figure was in line with economists’ expectations.
The increase in the combined primary and secondary income deficit - which includes international transfers such as non-resident withholding tax – was the main contributor to the higher annual deficit, although it was partly offset by a higher surplus in goods and services, Stats NZ said.
The biggest unadjusted quarterly movement was in the services balance, which expanded to a surplus of $3.1 billion versus a revised $1.1 billion in the prior quarter as services exports rose to $7.5 billion on increased spending from overseas visitors from $5.8 billion in the fourth quarter and service imports slipped to $4.4 billion from $4.7 billion in the prior quarter.
The goods balance deficit narrowed to $381 million from $1.2 billion in the prior quarter. Exports fell to $13.6 billion from $14.7 billion in the prior quarter, while imports fell to $14 billion from $15.9 billion three months earlier.
The financial account balance, which shows net investment flows, was a surplus of $126 million in the three months to March 31 versus a revised $2.2 billion in the prior quarter.
The balance on the capital account was a $21 million deficit in the March quarter versus a revised $18 million deficit in the prior quarter.
Foreign investment in New Zealand showed a surplus of $1.9 billion in the March quarter versus a revised surplus of $1 billion in the three months to Dec. 31.
New Zealand’s net international liability position was $156.1 billion or 54.5 percent of GDP as at March 31 from a revised $156.9 billion or 55.4 percent of GDP at Dec. 31. Stats NZ said that exchange rates appreciating against some of New Zealand’s major trade partners – Australia and the US – and a decrease in the mark-to-market value of some financial derivative liabilities led to a decrease in the new international liability performance.
The value of New Zealand’s international assets was $252.4 billion as at March 31 versus $252 billion in the three months to Dec. 31. The net external debt position – excluding financial derivatives and equity – was $150 billion or 52.4 percent of GDP as of March 31 versus a revised $150.4 billion or 53.1 percent of GDP as of Dec. 31.
According to Stats NZ, increased lending by New Zealand to unrelated parties overseas was the main contributor to the slightly smaller net external debt position.