In a clear indication of improvement in financial conditions, New Zealand's current account deficit declined significantly to 5.9%, of GDP well below the market estimates of 7.4% of GDP. The official figures released today indicated a sharp decline in imports and fall in income from foreign investments. John Morris of Statistics New Zealand, said: "The fall was driven by lower profits earned this quarter by foreign-owned New Zealand enterprises, particularly in the banking sector."

The country's current account deficit stands at 10.61 billion dollars, as compared to 14.57 billion dollars for the year to March. The account maintained a surplus of 124 million dollars in the June quarter, leaving negative territory it had been going through since March 2003. New Zealand reported a 1.19 billion decline in foreign investment that currently stands at 2.07 billion dollars in the recent three-month period led by change in unusual tax structure.

Summing up recent figures, TD Securities New Zealand economist Annette Beacher said: "Bottom line: New Zealand remains heavily dependent on offshore capital, [and] today's outcome does not alter that."