Rangitaki: staff insights blog

New Zealand's current account deficit has widened considerably, owing to many factors including the disruption caused by the pandemic, poor agricultural production, and higher global interest rates. These factors have given rise to a large deficit in the trade balance (the combined goods and services balances) which helped drive the current account deficit from 1.6% of GDP in June 2020 to 9.0% of GDP in December 2022.

The current account deficit began to narrow in the March quarter, falling to 8.5% of GDP, a trend that we expect to continue. In our Budget forecast, the deficit declines to 3.8% of GDP by June 2027, as tourism continues to recover, transport costs fall, and macroeconomic policy tightening weighs on import demand.