20 Dec 2017

Economy on steady heading as 2018 nears

3:30 pm on 20 December 2017

A pre-Christmas deluge of data has shown the economy is in reasonable shape going into the new year.

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Stats NZ has released its third-quarter balance of payments, and November month overseas trade and migration numbers.

The balance of payments, a broad indicator of the country's ability to pay its way in the world, improved slightly, with the annual deficit falling modestly to $7.1 billion, about 2.6 percent of gross domestic product - the lowest this year.

The numbers reflected stronger exports and booming tourism earnings.

Two measures of the country's overseas indebtedness were also slightly better, with net international liabilities falling to 56.3 percent of GDP, and net external debt steady at 54.1 percent of GDP.

ANZ Bank senior economist Phil Borkin said the data suggested New Zealand was saving more as a country, but that also had its downside.

"With more regulator and credit rating agency scrutiny over external borrowing, more onus is falling on saving to fund domestic investment ... Typically more saving means less growth."

Separate numbers showed the trade deficit hitting its highest in more than a year at $1.2bn, as imports hit a record monthly total, boosted in part by the purchase of a plane worth $263m.

The annual trade deficit increased to $3.4bn from $3bn.

The annual gain in the number of immigrants held steady in November - around 70,350, the same as the previous month - with fewer New Zealanders returning home but a steady stream of non-New Zealanders leaving, which likely reflects overseas students and those on working holidays coming to the end of their stays.

"Following the surge in foreign arrivals that began in 2013, we are now seeing the normal 'echo' in departures. We expect that this trend will continue for some time yet, and will drive a substantial downturn in total net migration over the coming years," Westpac senior economist Satish Ranchhod said.

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