Current account gap narrows on big spending tourist surge

Statistics show when Christchurch is the gateway, visitors leave around 86 per cent of their spending in the regions of the South Island.

New Zealand's annual current account deficit narrowed in the third quarter as an influx of big-spending tourists made up for the impact of weaker dairy export prices.

The current account gap was $8.1 billion, or 3.3 percent of gross domestic product in the 12 months ended September 30, from a revised gap of $8.3 billion, or 3.4 percent of GDP three months earlier, Statistics New Zealand said.

In the third quarter, the actual deficit blew out to $4.7 billion from a revised $1.17 billion in the second quarter, undershooting the $4.86 billion forecast in a Reuters survey. The deterioration was led by a reversal in the goods balance to a deficit of $2.48 billion, from a surplus of $688 million three months earlier, as imports rose faster than exports.

Prices of dairy products have gained in the past two GlobalDairyTrade auctions, but not enough to support Fonterra's forecast payout for the current season and leaving the global dairy market as a key risk for the domestic economy. At the same time, tourists have flooded into New Zealand, driving up the annual services balance.

"Both the number of visitors to New Zealand and spend per visitor increased in the September 2015 quarter," the government statistician said.

The annual surplus on services widened to $3.3 billion, the biggest since December 2004 when it reached $3.4 billion, from $2.78 billion three months earlier. The travel exports component rose to a surplus of $12.4 billion from $11.7 billion, more than twice the value of travel imports at about $5.3 billion.

There was a net outflow of investment of $2.4 billion in the third quarter, as a $6.6 billion decrease in liabilities (outflow) was partly offset by a $4.2 billion decrease in assets (inflow).

New Zealand's net external debt position, which excludes financial derivatives and equity, improved slightly to $136.9 billion, or 56.1 percent of GDP at Sept. 30, from $137.8 billion, or 57 percent at June 30. The net liability position worsened to $151 billion, or 61.9 percent of GDP, from a revised $148 billion, or 61.3 percent.

See the latest Statistics NZ release here: