- Stuart Ive, senior dealer foreign exchange at OMF
New Zealand's current account shortfall widened in the third quarter to NZ$4.75 billion following a revised deficit of NZ$1.17 billion in the June quarter, Statistics New Zealand reported. The steep expansion of the current account deficit last quarter was driven by the goods balance, which swung from a NZ$688 million surplus in the second quarter to a deficit of NZ$2.48 billion in the three months through September. In addition to that, the services balance contributed to the wider current account gap, with the June-quarter surplus of $503 million sliding into deficit by NZ$71 million. For the 12 months through September 30, the current account deficit shrank to NZ$8.10 billion, equivalent to 3.3% of gross domestic product, and compared with a revised NZ$8.26 billion on-year deficit in the second quarter.
Earlier in the week New Zealand's Treasury updated its economic and fiscal forecast, predicting a small operating deficit as a slowing economy and benign inflation keep a lid on the government's tax-take. Yet, Finance Minister English was relatively optimistic about the outlook, and announced plans to increase the Crown's capital spending by $1 billion in the 2016 budget, thereby providing a boost to the economy. The move comes after RBNZ Governor Graeme Wheeler said infrastructure investment by the government would be a welcome addition in helping fuel economic activity and reviving flagging inflation.
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