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Michael Gordon, Senior Economist at Westpac, notes that New Zealand’s annual current account deficit increased to 3.3% of GDP in June, compared to an average market forecast of 2.9%.

Key Quotes

“While this was the largest deficit in three years, it is still low relative to history, and remains within the range of what we would consider to be sustainable.”

“The balance of trade in goods and services improved in the June quarter, though it was softer than the same time last year.”

“Despite the widening in the current account deficit, New Zealand’s international position remains on a sustainable path. Net international liabilities were steady at 54.6% of GDP, which is the lowest reading for this series dating back to June 2000.”

“Relatively small current account deficits in recent years, and hence a smaller borrowing requirement, have meant that New Zealand has effectively been able to outgrow its debts.”

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