Overseas tourist spending continues to help New Zealand's balance of trade figures, Statistics New Zealand figures show.
The services balance remained "extremely strong'', hitting a record high in the three months ended March, ASB chief economist Nick Tuffley said yesterday.
The seasonally adjusted service balance increased by $166million to a surplus of $1.14billion in the quarter. Tourism continued to be a large driver as tourism exports lifted $91million during the quarter.
The tourism boost helped lift the quarterly balance into a surplus of $1.3billion against a market forecast of $960million.
The annual trade balance was a deficit of $7.5billion against a market forecast of $7.6billion.
That represented 3% of annual gross domestic product, or economic activity of New Zealand.
Mr Tuffley said ASB expected the current account deficit to remain relatively stable this year, on the back of tourism strength, rebounding oil prices and modest import value growth.
There were no implications from the release for GDP forecasts or the official cash rate.
ASB expects a 0.5% March GDP increase when figures are released this morning, and two further 0.25% OCR cuts in August and November.
Much of the narrowing in the deficit was owed to a smaller income deficit, he said.
In particular, income earned in New Zealand by foreign investors fell, in line with the slowing economy leading into 2016.
New Zealand's primary investment income deficit fell by $562million in the quarter.
A partial offset was general government transfers from New Zealand to abroad, including foreign aid, being larger than normal, making the secondary income net outflow slightly larger than normal.
Reviewing the goods balance, both imports and exports were slightly less than expected, Mr Tuffley said.
Falling goods imports reflected lower aircraft imports and decreases in dairy and meat exports left goods exports lower.
"From here, we expect little movement in the annual current account balance. In the short-term, we expect the services balance to remain strong on the back of continued tourism strength.''
Dairy prices would start their cyclical lift.
On the other side of the ledger, strengthening domestic demand and rebounding oil prices would raise import costs.
At a glance
• March current account surplus slightly larger than expected at $1.3billion.
• Annual current account deficit of 3% of GDP in line with expectations.
• Services surplus rose to highest level on record; goods deficit slightly narrower than expected.
• Primary income deficit also narrower than expected, contributing to larger overall current account surplus.
