New Zealand’s current account deficit for Q4 2024 was NZ$7.037 billion, a reduction from NZ$10.839 billion in the previous quarter. The decrease is attributed to a rise in services exports by NZ$688 million and goods exports by NZ$669 million.
The seasonally adjusted quarterly deficit stood at NZ$5.91 billion, down from NZ$6.385 billion. The services balance shifted to a surplus of NZ$41 million, compared to a deficit of NZ$424 million in the previous quarter.
Annual Deficit Trends
For the year ending December 2024, the annual deficit reached NZ$26.401 billion, representing 6.2% of gross domestic product. The current account encompasses the trade balance, net exports and imports of services, net investment income, and unilateral transfers.
This data indicates a considerable narrowing of the national shortfall, which had previously been a source of concern. A quarterly drop of over NZ$3.8 billion is not an incidental shift but a reflection of changing trade dynamics. The rise in exports in both goods and services suggests a recovery in external demand, which may be linked to improvements in global supply chains or increased foreign appetite for local offerings.
The services balance moving into surplus is particularly telling. A NZ$465 million swing in one quarter suggests a reversal of conditions that had weighed on this segment. This points to a resurgence in tourism, stronger demand for professional services, or improved revenues in sectors like education and transport. A positive services balance stabilises overall trade flows, as services tend to be less volatile than goods. This shift should not be overlooked.
The annual balance, though still deeply negative, is showing progress. A 6.2% share of GDP is high but moving in the right direction. There is still a reliance on foreign capital to support domestic activity, which leaves exposure to external shocks. Confidence in the trade position will depend on whether this trend continues or if gains are short-lived. Stronger exports and a more balanced services sector lessen vulnerability to external financing pressures.
Market Reactions And Future Outlook
With financial markets sensitive to these indicators, adjustments in funding costs or currency expectations are unavoidable. Lower deficits reduce reliance on offshore borrowing, which influences bond yields and foreign exchange positioning. If the downward trajectory persists, it will shape views on external stability and long-term funding resilience.
For short-term price movements, investors will want to assess whether these improvements are temporary or part of an ongoing shift. The next few weeks will be telling. If service sector strength holds, and export volumes sustain their momentum, defensive positioning may ease. However, any reversal in these figures could bring renewed pressure, particularly if external income streams remain weak. The path ahead is not without challenges, but recent data provides more clarity on what to watch.
