Current account deficit falls to $1.6 billion

NEW ZEALAND’s current account deficit has narrowed to 2.8% of gross domestic product (GDP), underpinned by tourism, as expected by most analysts.

New Zealand’s current account deficit fell to $1.6 billion in the quarter to June, the smaller deficit due to a record high $1.3 billion of services surplus, and a smaller primary income deficit, Statistics New Zealand said yesterday.

New Zealand exported a record $5.8 billion worth of services in the June quarter, seasonally adjusted, while importing a record $4.5 billion worth of services.

‘‘The increase in services exports was driven by $3.7 billion worth of spending by overseas travellers in New Zealand; or exports of travel services.

‘‘This is the largestever sea sonally adjusted export of travel services,’’ SNZ said

Part of the increase was due to the World Masters Games in April, followed by the British and Irish Lions Rugby tour to New Zealand in the June and September quarters.

SNZ’s GDP data is scheduled out today with analysts expecting economic growth to have risen in a range between 0.6% up to 0.8%.

SNZ said New Zealand’s goods and services balance was a surplus; having exported more than the country imported, but the deficit in the primary and secondary income balance meant the overall current account balance was a deficit.

Westpac economist Satish Ranchhod said the narrowing deficit was a firmer result than expected, but had not altered his expectations of 0.8% GDP growth being confirmed today.

‘‘The [2.8% of GDP] result was stronger than the average market forecast for a deficit of 3.1%, which was also our own forecast,’’ Mr Ranchhod said.

While data was a little better than expected, Mr Ranchhod said it had only limited implications for today’s GDP, with both exports and imports ‘‘close to expectations’’.

ASB economists, who were picking 0.6% GDP today, also saw few implications for the GDP result. While the services sector balance recorded a record high surplus on the back of the Masters Games and Lions tour, the stronger goods sector balance during the quarter was largely due to increasing dairy export volumes, ASB said.