NZ 1Q current account surplus narrower than expected

Rising imports affected the current account surplus in the first quarter. Photo / File

New Zealand reported a narrower-than-expected current account surplus in the first quarter while the annual deficit widened on the back of rising imports.

The surplus was $244 million in the three months to March 31 versus a revised fourth-quarter deficit of $2.4 billion, Statistics New Zealand said. The annual deficit was $8.1b, or 3.1 per cent of gross domestic product for the year ended March versus a deficit of $7.8b - also 3.1 per cent of GDP - in the prior year.

"The larger deficit in 2017 was driven by a $478m decrease in our goods and services surplus, largely due to increased New Zealand imports of goods between the March 2016 and March 2017 years," Stats NZ said.

Economists had expected a surplus of $922m in the first quarter and an annual deficit of $7.3b or 2.7 per cent of GDP, according to a Reuters poll.

The biggest quarterly movement was in the services balance, which reached a surplus of $2.7b in the first quarter versus a surplus of $1.1b in the prior quarter. The services balance has increased on the back of booming tourism.

The goods balance recorded a surplus of $151m in the three months to March 31 versus a revised deficit of $1.42b in the prior quarter. Exports were $12.6b while imports were $12.5b, and in the fourth quarter exports were a revised $12.2b and imports were a revised $13.7b.

The financial account balance showed a surplus of $2.0b in the three months to March 31 versus a revised deficit of $2.9b in the prior quarter. Banks were at the centre of the transactions. There was a $2.5b withdrawal of financial assets held overseas as banks decreased their holdings in other investments assets such as currency and deposits.

The balance on the capital account was a $3m surplus in the March quarter versus a revised $804m surplus in the prior quarter as the December quarter reflected the Kaikoura earthquake reinsurance claims, Stats NZ said.

New Zealand's net international liability position was $154.8b or 58.5 per cent of GDP as at March 31, from a revised $157.5b or 60.4 per cent of GDP at December 31.

The value of New Zealand's international assets hit the highest value ever reported as at March 31 after increasing $3.1b to $242.8b. The increase was due to overseas share price movements increasing the value of the assets, Stats NZ said.

The net external debt position - excluding financial derivatives and equity - was $144.9b or 54.7 per cent of GDP at March 31 versus $144.1b or 55.3 per cent of GDP on December 31.