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Current account surplus narrower in Q1

NZN 14/06/2017 Rebecca Howard

New Zealand reported a narrower-than-expected current account surplus in the first quarter while the annual deficit widened on the back of rising imports.

The surplus was $244 million in the three months to March 31 versus a revised fourth-quarter deficit of $2.4 billion, Statistics New Zealand said.

The annual deficit was $8.1b, or 3.1 per cent of gross domestic product for the year ended March versus a deficit of $7.8b in the prior year.

"The larger deficit in 2017 was driven by a $478m decrease in our goods and services surplus, largely due to increased New Zealand imports of goods between the March 2016 and March 2017 years," Stats NZ said.

Economists had expected a surplus of $922m in the first quarter and an annual deficit of $7.3b or 2.7 per cent of GDP, according to a Reuters poll.

The biggest quarterly movement was in the services balance, which reached a surplus of $2.7b in the first quarter versus a surplus of $1.1b in the prior quarter. The services balance has increased on the back of booming tourism.

The goods balance recorded a surplus of $151m in the three months to March 31 versus a revised deficit of $1.42b in the prior quarter.

Exports were $12.6b while imports were $12.5b.

The financial account balance showed a surplus of $2.0b in the three months to March 31 versus a revised deficit of $2.9b in the prior quarter.

Banks were at the centre of the transactions. There was a $2.5b withdrawal of financial assets held overseas as banks decreased their holdings in other investments assets such as currency and deposits.

The value of New Zealand's international assets hit the highest value ever reported as at March 31 after increasing $3.1b to $242.8b. The increase was due to overseas share price movements increasing the value of the assets, Stats NZ said.

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