Chinese tourists help New Zealand curb current account deficit

WELLINGTON, New Zealand-New Zealand’s current account deficit widened in the third quarter to 4.75 billion New Zealand dollars (US$3.21 billion), compared with a revised deficit of NZ$1.17 billion in the second quarter, Statistics New Zealand said Wednesday.

New Zealand’s economy grew at a faster pace than expected in the third quarter as a rebound in food manufacturing and increased tourism spending stoked activity.

“Today’s solid data is consistent with a period of stability” in the benchmark interest rate, Mark Smith, senior economist at ANZ Bank New Zealand Ltd., said in a research note.

The figure, above the downwardly revised 0.3% increase of the June quarter and forecasts for an acceleration to 0.8%, left annual growth at 2.3%, in line with expectations. GDP in the quarter expanded 2.3% from a year earlier, a slowing from on-year growth of 2.4% in the previous quarter.

“Overseas visitor spending is driving our services surplus, which has grown each quarter since December 2013”, worldwide statistics manager Jason Attewell said in a statement. That spurred the Reserve Bank to embark on an easing cycle in June, cutting the official cash rate four times to reach 2.5 percent in last week’s review. The inflation outlook has also been lowered to 2 percent in the second quarter from 2.5 percent.

Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, this week said it expected milk collection in 2015-16 to be 6 percent less than last season as falling incomes force New Zealand farmers to cull herds and stop using feed supplements. Retail trade and accommodation grew 1.6 percent, while transport, postal, and warehousing expanded 2.6 percent.