NZ: Current account balance flipped from deficit to surplus - ANZ

Analysts at ANZ suggest that as it typically does in Q1, the New Zealand’s unadjusted current account balance flipped from deficit to surplus (to +$0.2bn from -$2.8bn in Q4).

Key Quotes

“This was a slightly narrower surplus than we expected (by $0.1bn), contributing to a slightly wider annual deficit than we had pencilled in, at 2.8% of GDP ($7.9bn). Despite the small surprise in today’s release, the deficit remains well below its historical average of 3.6% of GDP.”

“In seasonally adjusted terms, the current account deficit widened by $1.0bn to $3.0bn. As expected, this was driven entirely by the goods balance, which slipped $1.2bn to a deficit of $0.5bn, as ongoing solid broad-based import demand combined with higher oil prices and volumes, while exports softened on lower dairy prices and meat volumes.”

“The external balance sheet continues to look in reasonable shape (by New Zealand’s standards at least).”

“The net international liability position fell by $0.8bn to $156.1bn, driven largely by valuation changes and net exchange rate changes. However, as a share of GDP it lifted 0.1%pts to 54.5%, suggesting the possibility of a soft nominal GDP print tomorrow.”

“We expect to see a 0.4% q/q expansion in production GDP, with net exports dragging on real expenditure GDP.”