Meat exports are behind a record $1.4 billion current account
surplus for the quarter to March, underpinned by increased
While economists have warmed to the positive data from
Statistics New Zealand (SNZ), some are warning of a dampening
effect from commodity price declines later in the year.
A current account surplus means New Zealand's earnings from
the rest of the world have exceeded its overseas expenditure.
SNZ international statistics manager Jason Attewell said the
increase in the value of goods exports and higher spending by
overseas visitors reduced the current account deficit in the
quarter to March.
''As a result, we had $1.3 billion of net outward investment
from New Zealand this quarter, mostly due to the Reserve Bank
of New Zealand increasing its foreign exchange assets,'' he
ASB economist Christina Leung said the current account
surplus was in line with market expectations, but slightly
more positive than expected.
''While dairy exports eased from the record highs in the
previous quarter, this was more than offset by the very
strong growth in meat exports in the first quarter,''she
Services exports were also slightly stronger than expected,
reflecting ''strong spending'' from the higher number of
overseas visitors to New Zealand during the quarter.
While growth in meat and dairy exports has been a key driver
of the current account over the past year and Ms Leung
expected the annual deficit to continue to narrow over much
of 2014, she believed it would widen again from later in the
year as global commodity prices fell from record levels.
BNZ chief economist Craig Ebert said the deficit's ongoing
shrinkage in the year to March 2014, to $6.3 billion, or 2.8%
of GDP, from $7.6 billion, or 3.4% of GDP, in calendar 2013,
rested a lot on the 40-year highs in New Zealand terms of
''And that impulse has more recently started to abate.''
While prices in the global dairy trade auction on Tuesday
night increased 0.9%, they are down about 25% since February
and are likely to decline more in the months ahead.
He noted meat export prices continued to strengthen, and wool
prices had achieved year-to-date highs.
''However, forestry product export prices are coming off the
boil, and noticeably for logs, integral to China's slowdown
story,'' Mr Ebert said.