Tourist spending helps drive down New Zealand current account deficit

New Zealand's current account deficit shrank in the quarter ending March as overseas visitors upped their spending and foreign investors saw smaller returns, the government statistics agency said Wednesday.

The deficit of 1.49 billion NZ dollars (1.04 billion U.S. dollars) was down by 665 million NZ dollars (465.5 million U.S. dollars) from the previous quarter, and was the smallest quarterly deficit since the March 2014 quarter, according to Statistics New Zealand.

Less income earned from foreign investment in New Zealand was the main driver in the fall in the primary income deficit, with falls in both direct and portfolio investment income.

"Generally, foreign-owned New Zealand companies earned lower profits this quarter," international statistics manager Stuart Jones said in a statement.

"This meant there was a decrease in investment income paid to foreign investors."

Higher spending by foreign tourists also saw the services surplus hit a record high, topping 1 billion NZ dollars (700 million U.S. dollars) for the first time since the June 2004 quarter.

The services surplus increased 166 million NZ dollars (116.2 million U.S. dollars) to 1.14 billion NZ dollars (798 million U.S. dollars), driven by a rise in travel service exports.

International trade fell in the latest quarter, with goods imports decreasing more than exports, resulting in a smaller goods deficit.

The annual current account deficit was 7.5 billion NZ dollars (5.25 billion U.S. dollars), or 3 percent of gross domestic product (GDP), for the year to the end of March, compared with a deficit of 8 billion NZ dollars (5.59 billion U.S. dollars), or 3.2 percent of GDP, for the year ended December 2015.

The drop was largely due to an increase in the services surplus and a decrease in the primary income deficit.

The current account deficit had ranged between 2.4 percent and 3.4 percent of GDP over the last two years, and it peaked at 7.8 percent in 2008. Endit