Deficit set to narrow

New Zealand's current account is expected to have narrowed when the balance of payments figures are released by Statistics New Zealand on Wednesday. 

ANZ senior economist Phil Borkin said after the deficit fell sharply in June to $1.6 billion, it was expected to have narrowed further to about $1.2 billion in September. That should see the annual deficit drop to 2.5% of GDP from 2.8%.

Once again, the narrowing in the quarter should be almost entirely  due to the goods and services balance which Mr Borkin projected to lift from a surplus of $800million to $1.1 billion.

The lift in the terms of trade  would assist.

"It comes despite a drop in international tourist spending, and offsets a slightly larger income deficit, which we expect to widen on the back of slightly better profitability of foreign companies operating  in New Zealand."

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