20 Jun 2012

Current account deficit slips further into red

1:59 pm on 20 June 2012

New Zealand's current account deficit slipped further into the red in the first three months of the year as exports fell.

The deficit stood at $2.8 billion in the three months to March - $600 million larger than in the previous quarter.

Statistics New Zealand says the deterioration is due to the country earning less from exports of dairy, oil and fruit, while more petrol was imported.

Spending by tourists also slipped as visitor numbers dropped off after last year's Rugby World Cup.

Investment income fell as foreign-owned banks earned less.

On an annual basis, the current account deficit widened to $9.7 billion, equating to 4.8% of gross domestic product (GDP).

That compares with 3.7% at the same time a year earlier.

ASB chief economist Nick Tuffley says the goods surplus is starting to abate as commodity prices fall, and the impact of last year's Rugby World Cup is beginning to wear off.

He expects the current account deficit to continue to widen over the next year.

The current account is the difference between what New Zealand pays out to foreigners and how much the country earns from overseas.