NZ BoP: Stronger in the quarter, weaker in the year – ANZ

Analysts at ANZ note that the New Zealand’s Q2 unadjusted quarterly current account balance switched from surplus to deficit (from a downwardly-revised $0.1bn in Q1 to -$1.6bn), owing entirely to a narrowing services surplus on the back of the tourism-season wind down.

Key Quotes

“The mix of a wider quarterly deficit than we had expected and revisions to previous quarters saw the annual deficit land at $9.5bn (3.3% of GDP) – around $1bn wider than we had pencilled in. Overall, the annual deficit remains below its historical average of 3.6% of GDP.”

“In seasonally adjusted terms, the quarterly current account deficit narrowed by $0.5bn to $2.7bn. As expected, this was driven by a widening services surplus ($0.1bn to $1.5bn) and narrowing goods deficit ($0.3bn to -$1.4bn).”

“New Zealand’s net international liability position (NILP) widened $1.6bn to $157.9bn.”

“There are no obvious implications from today’s data for tomorrow’s real GDP figures. We expect to see a 0.7% q/q expansion in production GDP. The drag from net exports to real expenditure GDP is expected to shrink as export volumes pick up from Q1.”