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Analysts at ANZ suggest that as it typically does in Q1, the New Zealand’s unadjusted current account balance flipped from deficit to surplus (to +$0.2bn from -$2.8bn in Q4).

Key Quotes

“This was a slightly narrower surplus than we expected (by $0.1bn), contributing to a slightly wider annual deficit than we had pencilled in, at 2.8% of GDP ($7.9bn). Despite the small surprise in today’s release, the deficit remains well below its historical average of 3.6% of GDP.”

“In seasonally adjusted terms, the current account deficit widened by $1.0bn to $3.0bn. As expected, this was driven entirely by the goods balance, which slipped $1.2bn to a deficit of $0.5bn, as ongoing solid broad-based import demand combined with higher oil prices and volumes, while exports softened on lower dairy prices and meat volumes.”

“The external balance sheet continues to look in reasonable shape (by New Zealand’s standards at least).”

“The net international liability position fell by $0.8bn to $156.1bn, driven largely by valuation changes and net exchange rate changes. However, as a share of GDP it lifted 0.1%pts to 54.5%, suggesting the possibility of a soft nominal GDP print tomorrow.”

“We expect to see a 0.4% q/q expansion in production GDP, with net exports dragging on real expenditure GDP.”