New Zealand’s Balance of Payments current account (external) deficit now stands at 4.8% of GDP, up from the 2.3% and 3.8% recorded in the two previous March years.
The latest figures reflect New Zealand’s softer growth in exports. Falling export prices and weaker demand overseas led to lower receipts in the past few months. As noted in our latest Birds Eye View, top export earners such as dairy, meat and forestry products have all experienced reduced revenue in recent months.
If the country’s trade performance continues to slip the Balance of Payments picture may again attract the gaze of credit rating agencies. Unfortunately, given official forecasts of further deterioration in this external deficit, such attention (whether warranted or not) seems unavoidable.