New Zealand posted a seasonally adjusted current account deficit of NZ$1.56 billion in the first quarter of 2020, Statistics New Zealand said on Wednesday.
That missed expectations for a surplus of NZ$1.482 billion but was an improvement over the NZ$2.66 billion shortfall in the three months prior.
The seasonally adjusted goods deficit narrowed to NZ$213 million, while the services surplus narrowed to NZ$983 million.
The primary income deficit widened to NZ$2.2 billion and the financial account recorded a net outflow of NZ$7.7 billion.
The smaller deficit was driven by trade in goods with the goods deficit narrowing NZ$613 million to NZ$213 million. New Zealand’s services surplus narrowed by NZ$83 million to NZ$983 million during the quarter.
“Travel restrictions began in early February to combat the spread of COVID-19, followed by a shutdown of New Zealand’s borders to all non- residents from 19 March,” international statistics senior manager Peter Dolan said.
A NZ$342 million fall in spending by international students and visitors was the main driver for the overall fall in services exports (down NZ$460 million), followed by a fall in transportation services exports, down NZ$83 million.
Services imports were also down NZ$376 million during the quarter with travel services imports down NZ$165 million and transportation services imports down NZ$63 million.
Volatility in world financial [markets][1], sparked by the COVID-19 pandemic, caused large valuation changes in our international assets and liabilities. This drove a net rise of NZ$10.1 billion in net international liability position.
New Zealand’s net international liability position reached NZ$182.0 billion (58.0 percent of GDP), the highest percentage of GDP since the December 2016 quarter.
Foreign investment in New Zealand earned overseas investors NZ$4.1 billion in Q1, NZ$110 million less than in the December 2019 quarter. This was driven by a fall in income earned on portfolio investment (NZ$327 million) but was partly offset by an increase in income earned on direct investment (NZ$224 million).
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