- Daria Kwon, Statistics New Zealand
New Zealand's current account deficit dropped markedly during the last quarter of 2016 amid stronger tourism and higher reinsurance flows into New Zealand, following the November earthquake, official figures revealed on Tuesday. Statistics New Zealand reported the country's current account deficit fell to NZ$2.34 billion in the Q4 of 2016, surpassing analysts' expectations for a NZ$2.43 billion deficit. Meanwhile, the preceding quarter's gap of NZ$4.89 billion was revised up to NZ$5.03 billion. On an annual basis, the country's deficit came in at NZ$7.112, accounting for 2.7% of GDP, following 3% in the Q3 of 2016. Analysts expected the deficit to account for 2.8% of GDP. Data also showed that the number of tourists coming to New Zealand and the amount of money they spend rose markedly. Thus, service spending climbed to a $1.2 billion surplus, $174 million up from the prior quarter. Moreover, Statistics New Zealand said that overseas reinsurance claims, submitted after the November 7.8 magnitude earthquake hit the town of Kaikoura, also boosted fund flows in the country. Analysts suggest that the better-than-expected current account deficit would be highly welcomed by the Reserve Bank of New Zealand that holds a meeting next week. However, markets do not expect the Central bank to raise its key interest rate at the upcoming meeting.
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