Kiwis spent more on importing cars and parts in the latest quarter, with overall goods imports increasing $127 million.
This is among figures released by Statistics New Zealand, showing the country earned more income from overseas investments in the December 2016 quarter. It resulted in the lowest current account deficit since March 2014.
That’s an indication the overall economic picture looks positive.
A review of the official cash rate shortly isn’t expected to see a change either.
Instead, most pundits put long term annual growth around 3% or more.
Tourism is providing a boost, and no doubt helping the rental vehicle business.
“The number of tourists to New Zealand increased in the December quarter, as did the average amount each tourist spent,” international statistics senior manager Daria Kwon says.
New Zealand earned more from exports of services than spent on imports of services in the December 2016 quarter, influenced by higher spending international visitors.
Construction is still expanding and agriculture is steady.
The current account balance is seen as an important indicator of a country’s financial position. A balance of payments deficit means New Zealand imported more goods, services, and capital than it exported.
The seasonally adjusted current account deficit decreased to $1.6 billion for the December 2016 quarter, $420 million smaller than the September 2016 quarter’s deficit.
“New Zealand earned $2 billion from investment overseas, $129 million more than in the September quarter,” Kwon says. “A large portion of this extra income was reinvested back into the overseas subsidiaries, instead of being paid out as dividends.”
New Zealand’s annual current account deficit was $7.1 billion (2.7 percent of GDP) for the year ended December 2016, down from $8.3 billion (3.4 percent of GDP) for 2015.
The November 14 Kaikoura earthquake triggered New Zealand insurance companies to claim on reinsurance policies they hold with overseas reinsurers, with the claims around $694 million. This resulted in a capital account surplus of $683 million for the December 2016 quarter.
