WELLINGTON, March 26 (Reuters) - New Zealand's annual current account deficit widened in the fourth quarter on higher imports and a shortfall in investment income, but was seen nearing its peak easing pressure on the currency and the country's credit rating.
The annual current account deficit grew to NZ$16.07 billion ($9.1 billion) in the December quarter from NZ$15.5 billion in the previous quarter, data showed on Thursday.
The data was exactly in line with a Reuters poll forecast, and was seen as likely to show some gradual improvement.
'In the short term the current account is likely to remain wide, but in the second half of this year the annual current account is likely to be narrowing in, with that trend continuing over a couple of years,' said ASB Bank chief economist Nick Tuffley.
The New Zealand dollar was initially unmoved by the data but later gained around a quarter of a cent to $0.5685/95 also helped by stronger equity markets. Interest rates were unmoved.
The seasonally adjusted deficit for the December quarter narrowed to NZ$3.77 billion from NZ$4.01 billion in the third quarter as an increase in the value of dairy and forestry products was partly offset by the increased value of imports of services, Statistics NZ (SNZ) said.
The services balance also deteriorated pointing to tourism earnings suffering because of the global downturn.
The government agency said the deficit equated to 8.9 percent of gross domestic product, on an expenditure basis, compared with 8.6 percent in the previous quarter.
The annual balance had been gradually improving after hitting record high levels in 2006, helped by a weaker New Zealand dollar as well as stronger exports. But surging oil prices and drought stalled the process.
The Reserve Bank of NZ earlier this month forecast the current account deficit to remain around 8 percent of GDP through 2009 before narrowing steadily from early 2010.
Rating agency Standard & Poor's cut the outlook on New Zealand's AA-plus foreign currency rating to negative from stable in January, partly due to its widening current account deficit.
The sharp deterioration in the deficit has put further pressure on the rating as the government is forced to borrow heavily to finance large budget deficits because of the deepening recession.
($1=NZ$1.77)
(Reporting by Mantik Kusjanto; Editing by James Thornhill)
((mantik.kusjanto@thomsonreuters.com; +64 4 471 4232;
Reuters Messaging: mantik.kusjanto.reuters.com@reuters.net)) Keywords: NEWZEALAND ECONOMY/CURRENTACCOUNT (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The annual current account deficit grew to NZ$16.07 billion ($9.1 billion) in the December quarter from NZ$15.5 billion in the previous quarter, data showed on Thursday.
The data was exactly in line with a Reuters poll forecast, and was seen as likely to show some gradual improvement.
'In the short term the current account is likely to remain wide, but in the second half of this year the annual current account is likely to be narrowing in, with that trend continuing over a couple of years,' said ASB Bank chief economist Nick Tuffley.
The New Zealand dollar was initially unmoved by the data but later gained around a quarter of a cent to $0.5685/95 also helped by stronger equity markets. Interest rates were unmoved.
The seasonally adjusted deficit for the December quarter narrowed to NZ$3.77 billion from NZ$4.01 billion in the third quarter as an increase in the value of dairy and forestry products was partly offset by the increased value of imports of services, Statistics NZ (SNZ) said.
The services balance also deteriorated pointing to tourism earnings suffering because of the global downturn.
The government agency said the deficit equated to 8.9 percent of gross domestic product, on an expenditure basis, compared with 8.6 percent in the previous quarter.
The annual balance had been gradually improving after hitting record high levels in 2006, helped by a weaker New Zealand dollar as well as stronger exports. But surging oil prices and drought stalled the process.
The Reserve Bank of NZ earlier this month forecast the current account deficit to remain around 8 percent of GDP through 2009 before narrowing steadily from early 2010.
Rating agency Standard & Poor's cut the outlook on New Zealand's AA-plus foreign currency rating to negative from stable in January, partly due to its widening current account deficit.
The sharp deterioration in the deficit has put further pressure on the rating as the government is forced to borrow heavily to finance large budget deficits because of the deepening recession.
($1=NZ$1.77)
(Reporting by Mantik Kusjanto; Editing by James Thornhill)
((mantik.kusjanto@thomsonreuters.com; +64 4 471 4232;
Reuters Messaging: mantik.kusjanto.reuters.com@reuters.net)) Keywords: NEWZEALAND ECONOMY/CURRENTACCOUNT (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.