New Zealand has posted a $3 billion first quarter current account deficit - the largest since the 2007-08 global financial crisis - as imports far outweighed exports.
The current account balance records the value of New Zealand's transactions with the rest of the world in goods, services, and income.
While the seasonally adjusted data for the March quarter was a $3 B deficit, for the year to March the deficit was $7.9 B; or 2.8% of gross domestic product (GDP). By comparison, the US deficit is 2.6% of GDP and Australia is 2.3% of its GDP.
Statistics New Zealand international statistics senior manager Peter Dolan said the goods deficit widened to $1.7 B in the March quarter, due to strong imports of petroleum and machinery and equipment, such as tractors.
“We had a record value of imported goods this quarter, which continued a trend of rising imports,” Dolan said.
NZ's exports of goods fell 5.9% from the December quarter's record high.
“Lower dairy prices and a fall in the volume of meat exports contributed to the drop,” he said.
ASB rural economist Nathan Penny said the weaker goods balance in the quarter was largely due to weak export values, which fell by $849 million.
“Agricultural production was weak and exports subsequently weak also,” he said.
However, Penny believed the decline in the goods balance would prove temporary, given agricultural production had improved in recent months and that would flow through into exports during the two quarters.
“In addition, export prices have lifted so this will also boost the goods balance,” Penny added.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.