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NZ: Broadly stable balance of payments – ANZ

2019-06-19 12:40

Miles Workman, senior economist at ANZ, points out that the New Zealand’s annual current account deficit narrowed $0.6bn from an upwardly revised Q4 to $10.6bn in Q1, resulting in the current account deficit as a share of GDP to narrow from 3.8% to 3.6%, which is in line with its historical average.

Key Quotes

“As is typically the case, the unadjusted quarterly current account transitioned from deficit in Q4 to surplus in Q1 (from -$3.5bn to $0.7bn). This was slightly larger than the $0.2bn surplus we had pencilled in. Much of the variance seems timing related, with revisions appearing to capture a large chunk.”

“In seasonally adjusted terms, the current account deficit was broadly stable in Q1, narrowing by just $60m. A smaller goods deficit (on slightly softer imports) was offset by a smaller services surplus, which shrank by around $0.1bn on the back of higher services imports.”

“From here, we expect the annual current account deficit to remain broadly stable as a share of GDP for the next year or so, before gradually widening to a little over 4% by the end of 2021.”

“There are no obvious implications from today’s data for tomorrow’s real GDP figures. Total net exports (goods and services) are expected to drag on quarterly real expenditure GDP growth, but robust domestic activity should support a modest pickup in economic activity overall. We expect to see a 0.6% q/q lift in expenditure GDP and a 0.4% q/q expansion in production GDP.”

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