Current Account Deficit at 20 Year Low
June 25, 2010 New Zealand Finance
The New Zealand current account deficit has reached its lowest level in twenty years, in the year to March.
On June 23rd Statistics New Zealand released the latest current account deficit figures, revealing a decrease in the country’s current account deficit. For the year ended March 2010 the current account deficit was NZD 4.5 billion, compared to NZD 14.6 billion for the same period a year ago. The latest figure translates to 2.4 percent of the national GDP, the lowest recorded level since September 1989. The adjusted deficit for the quarter to March 2010 was NZD 1.6 billion.
The improvement in the current account was attributed to an increase in the price of export goods. John Morris, Balance of Payment Manager at Statistics New Zealand, elaborated on the explanation, saying “…this is the first increase in goods exports for over a year,” and “…dairy prices moved significantly.” Jane Turner, Economist at ASB bank, added that a weak import demand was a significant factor in the deficit result. As the New Zealand economy continues to recover, she expects the current account to increase again along with import levels.
The current account figure was also aided by the once-off legal settlement between the Inland Revenue Department and four international banks. Ignoring the effect of the legal action, the New Zealand deficit figure would have been NZD 6.1 billion, or 3.3 percent of the GDP.
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