Respectable Current Account Improvement, Says BirchTreasurer
Significant Export Gains in Major Western Markets
The current account deficit for the June 1998 year at 6.7% of GDP shows a respectable improvement on the 7.7% of the December 1997 year and 7.3% for the March 1998 year, Treasurer and Finance Minister Bill Birch said today.
For the June quarter, however, the seasonally adjusted deficit deteriorated reflecting in part increased overseas travel based on income from the tax cuts and AMP demutualisation in combination with cheap airfare deals, he said
"The June quarter figures also continue to show reduced outcomes as a result of the prolonged El Nino drought and fall-out from the Asian crisis."
He also noted the improvement in the trend in merchandise trade balance evident in trade figures for the month of August 1998, released by Statistics New Zealand simultaneously with the current account statistics today.
"Exports to Asia clearly show the impact of the international financial turmoil," Mr Birch said.
The value of exports to Korea down, for example, by 21% ($190m) and Thailand down 19% ($54m) in the year to August 1998, compared with the August 1997 year.
"The figures also show, however, significant evidence of adjustment by exporters to offset the impact of the Asian crisis. Exports to the US are, for example, up 25.4% ($540m), and significant gains in some European exports.
"Exports to Belgium are, for example, up 53% ($175m). Italy is up 44.3% ($133m), and Germany 23% ($115m). Those four countries alone show gains of $963m on the year," Mr Birch said.