Deficit worst since start of the GFC

"In some ways the deficit figures are still a reminder of the bad old 'borrow and spend' days" ANZ economists

The gap between the value of New Zealand exports and imports has blown out to the biggest margin since the global financial crisis in 2008.

It is known as the balance of payments, and the deficit for the first three months of the year grew to a seasonally adjusted $2.8 billion.

This was a much worse figure than most banks had been expecting in their forecasts.

Statistics New Zealand said record imports contributed to the figure, which took the annual deficit to $8.1b or up to 3.1 per cent of GDP.

ANZ had been expecting the figure to come in at 2.6 per cent of GDP, but Westpac was more on the money with a 3 per cent forecast.

ANZ bank said the figure was much larger than expected, disappointing and ‘‘heading in the wrong direction’’.

‘‘In some ways today’s figures are still a reminder of the bad old ‘borrow and spend’ days,’’ it said.

‘‘The economy needs to lift its savings performance and policy settings need to change to encourage [that].’’

ASB agreed the size of the deficit was unexpected, but said it believed it was largely due to ‘‘temporary factors’’, including a dip in agricultural production.

‘‘We expect the current account deficit to narrow steadily over 2017,’’ it said.

The deficit did not appear to trouble sharemarket investors who had sent the NZX50 index 0.7 per cent higher to 7495 by early afternoon.

The New Zealand dollar was also trading slightly up against the greenback at US 72.2 cents

Another indication of the health of the economy will come on Thursday, when quarterly GDP figures are due to be released.

The Organisation for Economic Cooperation and Development will also release its economic survey of New Zealand to the public on Thursday.

Included in the OECD’S report will be suggestions on how the country could improve productivity and ‘‘adapt to the changing labour market’’.