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New Zealand Posts Record Services Surplus in Q2 On Tourism

-Current Account Deficit at 2.8% of GDP Year to June
     WELLINGTON (MNI) - From balance-of-payments data for the second quarter
released by Statistics New Zealand on Wednesday:
                                            Q2            Q1
Current Account Balance (SA)       -NZ$1.6 Bln   -NZ$2.8 Bln
Current Account Balance (nominal)  -NZD618 Mln   +NZD221 Mln
MNI Median                         -NZD975 Mln
Annual Deficit, % of GDP                  2.8%          3.1%
MNI Median Deficit                        3.0%
Annual Current Acct Balance           -7.5 Bln      -7.7 Bln
     FACTORS: New Zealand's current account deficit in seasonally adjusted terms
narrowed sharply in the second quarter as tourism spurred services surplus to a
record NZ$1.3 billion. This compares with NZ$985 million services surplus in the
first quarter. The increase in services exports was driven by NZ$3.7 billion
worth of spending by overseas travelers in New Zealand which is the largest-ever
seasonally adjusted export of travel services. Part of this increase was due to
the World Masters Games in April, and the British and Irish Lions Rugby tour to
New Zealand in the June and September quarters.
     New Zealand's primary income deficit was NZ$1.9 billion in Q2, NZ$403
million smaller than the March quarter. The smaller primary income deficit was
largely caused by a NZ$295 million increase in investment income from New
Zealand investment abroad (inflow) and a NZ$73 million decrease in income earned
by foreign investment in New Zealand (outflow).
     In actual terms, the services surplus narrowed to NZ$778 million in Q2
compared with NZ$2.7 billion in Q1, and was the main reason for current account
balance to slip to a deficit of NZ$618 million in Q2 versus a surplus of NZ$221
million in Q1. The current account deficit for the year to June was 2.8% of GDP
which was narrower than MNI median forecast for 3.0% of GDP.
     TAKEAWAY: The deficit, both actual and in percentage terms was lower than
MNI median forecast. This is the final partial data before the release of Q2 GDP
Thursday. The MNI median for Q2 GDP currently stands at growth of 0.8% q/q
growth and 2.5% y/y, slightly lower than +0.9% q/q forecast by the Reserve Bank
of New Zealand in its August Monetary Policy Statement.
--MNI Sydney Bureau; tel: +61 2-9716-5467; email:

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