New Zealand's current account deficit for the year to December has narrowed to 3.1% of gross domestic product (GDP), smaller than analysts' expectations, the gap being $7.7 billion.
Records set by the tourism sector helped offset an increasing goods deficit, partly driven by a decline in dairy exports.
For the previous year to December, the current account gap, or difference between imports and exports, stood at $8.1 billion, or 3.3% of GDP, Statistics New Zealand data showed yesterday.
Westpac senior economist Michael Gordon said the narrowing of the deficit to 3.1% of GDP was a smaller deficit than Westpac or the market had expected.
‘‘The surprise relative to our forecast was a fall in the outflow of of profits from overseas-owned firms in New Zealand.
‘‘While this might seem to be a positive in the sense that it improves the current account deficit, it does not reflect well on the strength of the domestic economy,'' Mr Gordon said.
The fortnightly global dairy trade auction yesterday fell for the fifth time in the past six auctions.
While the main index was down 2.9%, it has not hit the lows seen last June, but is at one of its lowest levels on record.
BusinessDesk reported the surge in inbound tourism helped offset the impact of a larger deficit on goods of $2.3 billion, up from $1.9 billion in the 12 months ended September.
That was partly driven by a drop in dairy exports, which offset a gain in imports such as consumer goods - clothing, footwear, toys and games, SNZ said.
Spending by international visitors to New Zealand rose by $2.6 billion to $12.8 billion in 2015, adding to other evidence of a tourist boom as a weak kiwi and strife in other parts of the world makes the nation a more attractive destination.
Guest nights rose to 4.8 million in January, the latest figures available and the highest in at least 20 years, while annual visitor numbers climbed 11% to a record 3.17 million.
- Additional reporting by BusinessDesk
