WELLINGTON: The balance of payments deficit narrowed in the final three months of last year as the tourism boom helped to offset the impact of weak dairy exports. Official figures from Statistics New Zealand show the deficit for the three months ended December was $2.6 billion, which was lower than expected.
The annual deficit also narrowed to $7.9b from $8.1b in the previous quarter. It equated to 3.1 percent of gross domestic product and was the lowest deficit in 12 months. The figures measure the country’s ability to pay its way, with deficits having to be financed by overseas borrowing.
The trade earnings were hit by the fall in dairy exports and a rise in imports, notably consumer goods such as clothes and furnishings. But the tourism boom helped to offset the fall in trade earnings hit on trade, with more than 3 million overseas visitors in New Zealand last year spending a record $12.8b.
The deficit was also kept in check by overseas investors earning less from their New Zealand assets. Infometrics head of forecasting Gareth Kiernan said the current account deficit could be expected to deteriorate through this year. “Although this result was better than anticipated, stronger growth in imports is expected to push the annual current account balance out to over 4.0 percent of GDP by mid-2016,” he said.
