Tourists help narrow current account deficit

By the end of 2015, tourism unofficially overtook dairy as New Zealand's No 1 export earner. Photo / Chris Gorman

Spending by international visitors in New Zealand reached a record high in 2015, helping narrow the nation's current account deficit and offsetting a decline in the impact of falling dairy exports.

The annual current account gap was $7.7 billion, or 3.1 percent of gross domestic product, Statistics New Zealand said. That's down from $8.1 billion, or 3.3 percent of GDP, in the 12 months ended Sept. 30 and lower than the deficit of $7.9 billion, of 3.2 percent of GDP forecast in a Reuters survey.

The deficit in the fourth quarter narrowed to $2.6 billion, from $4.7 billion three months earlier.

Spending by international visitors to New Zealand rose by $2.6 billion to $12.8 billion in 2015, adding to other evidence of a tourist boom as a weak kiwi dollar and strife in other parts of the world makes the nation a more attractive destination. Guest nights rose to 4.8 million in January, the latest figures available and the highest in at least 20 years, while annual visitor numbers climbed 11 percent to a record 3.17 million.

The surge in inbound tourism has helped offset the impact of a larger deficit on goods of $2.3 billion, up from $1.9 billion in the 12 months ended September 30. That was partly driven by a drop in dairy exports, which offset a gain in imports such as consumer goods - clothing, footwear, toys and games, the government statistician said.

That helped turn the balance on services to a surplus of $864 million in the fourth quarter from a $78 million deficit three months earlier.

Prices of dairy products fell for the fifth time in six auctions this year on the overnight GlobalDairyTrade platform, as the European Union signalled it will underpin production even in the face of global oversupply. The impact of low prices on dairy farmers and the broader economy prompted the Reserve Bank to conduct stress tests on banks' dairy loans, the results of which will be released today.

Today's figures showed a net inflow of investment, mainly due to a reduction in New Zealand's assets held overseas. That reduction meant the nation's net international liability position widened to $151.2 billion, or 61.4 percent of GDP in 2015.

The net external debt position was $135.8 billion, or 55.2 percent of GDP, down from a revised $136.3 billion, or 55.9 percent, three months earlier.

The capital account balance was a deficit of $5 million in the quarter ended December 31, from a surplus of $371 million in the third quarter. The financial account balance widened to $2.45 billion from $2.27 billion.

See more from Statistics NZ's Balance of Payments release here: