- Stuart Jones, international statistics manager
New Zealand's current account deficit narrowed last quarter, as spending by international visitors reached a record high in 2015. The current account gap contracted from $4.74 billion in the third quarter to $2.61 billion in the three months ended December, according to Statistics New Zealand. The annual current account deficit was $7.7 billion, or 3.1% of gross domestic product, down from $8.1 billion in the 12 months through September. Spending by tourists jumped by $2.6 billion to $12.8 billion in 2015. The surge in inbound tourism helped offset the impact of a larger deficit on goods of $2.3 billion, which rose from $1.9 billion in the 12 months ended September 30. That was partly led by a decline in dairy exports, which offset a gain in imports such as consumer goods.
Prices of dairy products declined for the fifth time in six auctions this year on the overnight GlobalDairyTrade platform, as the European Union signalled it will boost production even despite global oversupply. The GDT index is now 30% lower than a year ago and 55% off its early 2014 peak. Earlier in March Fonterra downgraded its milk price forecast from $4.15 per kg of milk solids to $3.90. In a bid to help the dairy sector and generate inflationary pressures the Reserve Bank of New Zealand cut interest rates to a record low 2.25% last week.
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