New Zealand's current account deficit posted a rare improvement in the three months ended September, figures released by Statistics New Zealand yesterday showed.
The deficit came in at 4.7% of GDP (gross domestic product), marginally smaller than the 4.8% recorded in the year to June.
The third-quarter result was also smaller than the 4.8% expected by the market.
BNZ economist Doug Steel said in the big picture, the smaller deficit was seen as a pause in the trend of deterioration that had been talked about all year.
''We continue to anticipate a wider current account deficit over the coming year, a result of investment outpacing domestic saving.''
The BNZ forecast the deficit to push through 6% of GDP in the coming year.
One of the things to focus on next year was whether financial markets and rating agencies would remain as sanguine towards New Zealand as they were now, he said.
The relaxed and favourable global sentiment towards New Zealand was reflected in the strength of the New Zealand dollar and low long bond rates.
''In this context, and if the deficit evolves as we think it will, there remains a risk that sentiment changes. This need not necessarily mean a swing to the negative, especially relative to the position of other countries.''
At the margin, a higher deficit could take the gloss off what was otherwise a rose-tinted market view, Mr Steel said.
The external account figures did not alter the BNZ view of a 0.5% rise in quarterly GDP, out today.
As usual, there were some surprises in the current account figures, he said. Some were expected, like the dairy-driven lift in exports. They would also show up in today's GDP figures where he expected the lift in export volumes to post their strongest gain since at least 1987, when the present GDP volume series began.
The implications for domestic production in the quarter would be limited, as a ''decent chunk'' of the dairy exports and increased meat exports came from lower inventory.
The strength of imports caused some surprise, although the strength was around the timing of counting imports in the trade figures (when goods crossed the border) and the timing of counting imports in the current account (when ownership changed).
• The balance of payments is a record that summarises all New Zealand transactions with the rest of the world. It comprises the current account and the capital account. The current account records the net balance of tradeable goods and services, net investment income received, and net transfers. The capital account summarises capital flows in and out of New Zealand.
