By VERNON SMALL deputy political editor
New Zealand's ugliest economic barometer has taken a sharp turn for the better because our companies have earned more than previously thought from overseas investments.
Statistics New Zealand has revised current account figures - the difference between what we earn as a country and what we spend - to show a $1.2 billion, or 14.2 per cent, improvement for the year to March.
The current account deficit is now 7.1 per cent of gross domestic product, not 8.2 per cent.
Economists said the amended numbers would have little impact on financial markets. The trend was unchanged and the deficit was still bad by international standards.
The deficit has been a key cause of the kiwi's 20 per cent devaluation against the United States dollar this year. But the news saw the dollar rise only slightly before settling back just above its all-time lows.
Prime Minister Helen Clark said she was pleased because the current account deficit had hung over the country for some time.
"It's fallen on this Government's plate to endeavour to deal with it. I'm delighted to think it is lower than was earlier suggested and I look forward to more progress," she told a post-cabinet press conference.
National finance spokesman Bill English also welcomed the improvement.
He said the big fall in the dollar's value would see further sharp improvements as resources switched to the export sector.
But that would push up the cost of living for many people.
Mr English said the Government should explain the changes rather than hide behind the smokescreen of currency union with Australia.
Economic outlook brightens as deficit slashed by $1.2bn
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