24 Mar 2011

Current account deficit expected to widen

7:04 am on 24 March 2011

New Zealand's annual current account deficit is expected to widen in the later part of this year, as any rebalancing in the economy is pushed out further.

Official figures show the deficit stood at $2.8 billion in the three months to the end of December, as foreign investors earned more and tourism earnings fell, offsetting higher export earnings.

ANZ economist Mark Smith says the Canterbury earthquake is likely to result in a temporary quarterly surplus as insurers claim money from their foreign re-insurers, but the deficit will worsen after that.

On an annual basis, the deficit stood at $4.4 billion, or 2.3% of Gross Domestic Product.