Bad news Bill English cops another: widening current account deficit

New Zealand’s current account deficit widened in the fourth quarter as a growing economy helped foreign companies earn more from local investments.

The current account deficit grew to $2.6 billion, seasonally adjusted, the largest since the fourth quarter of 2008, and from about $2.4 billion three months earlier, according to Statistics New Zealand.

The annual deficit was $7.8b pushing the annual gap to 3.3 percent of gross domestic product, from a deficit of $6.1b, or 2.6 percent of GDP, in the year ended September 30.

The current account is the broadest measure of the flow of goods and services across the border and a widening gap traditionally signals a risk for the currency as it shows a nation is spending more than it earns.

The income deficit grew by $434 million to $2.8b, the highest since the fourth quarter of 2010, reflecting more income earned from foreign investments in New Zealand and less income earned from investments abroad.

The actual current account deficit was $3.19b in the latest quarter, about matching the forecast in a Reuters survey of $3.15b, and narrower than the $5.01b gap in the third quarter.

The increase in the annual deficit was largely driven by a decline in the goods surplus, reflecting weaker dairy prices, while a range of imported commodities rose.

Doesn’t help Bill English that we’re continuing to live beyond our means. ?All those flat screen TVs we haven’t actually earned yet are costing us more than what we’re earning from selling milk powder and the like.

Although turning the books around is a great goal in and of itself, it has become a matter of pride for National to show that promised surplus. ?I think they’re a little too fixated on it now. ?The public know that these things are beyond the government’s control.

Things are going well in a general sense.


– 3 News