Balance Of Payments And International Investment

Balance Of Payments And International Investment Position: December Quarter

Balance of Payments Deficit Increases Statistics New Zealand today reported a $1,842 million December 2001 quarter current account deficit. This is $28 million smaller than the December 2000 deficit. However, after adjusting for seasonal factors, the current account deficit increased by $782 million when compared with the September 2001 figure. This is the second consecutive quarterly increase in the size of the seasonally adjusted current account deficit.

The main contributor to the increase in the December 2001 quarter seasonally adjusted current account deficit was a $622 million reduction in the size of the goods and services surplus. Falling exports of goods and services across the board was the main cause. Lower prices for New Zealand's goods exports, and falling volumes of exported goods both contributed to a $326 million fall in the value of goods exports. A $193 million fall in services exports was primarily due to a fall in the number of overseas visitors in the December 2001 quarter compared with the December 2000 quarter.

Increased returns to overseas investors from their investments in New Zealand were a secondary factor in the current account deficit increase. These returns rose by $219 million in the December 2001 quarter to $2,364 million, primarily from profits of foreign-owned New Zealand enterprises. This increase was partly offset by higher earnings of New Zealand residents from their investments overseas, which increased by $94 million: the third consecutive quarterly increase. Improved returns from subsidiaries in Australia were a significant factor in this increase.

The current account deficit for the year ended December 2001 was $3,800 million. This is 3.2 percent of GDP, and compares with the December 2000 year ended deficit of $6,142 million, which was 5.6 percent of GDP. The latest estimate of the trend in the current account deficit shows larger deficits in the September and December 2001 quarters, compared with the June 2001 quarter. The larger current account trend deficits are primarily the result of falling goods and services surpluses.

At 31 December 2001, New Zealand's net International Investment Position was negative $88.8 billion. This is a 0.9 percent decrease from the negative $89.6 billion at September 2001. From September 2001 to December 2001, the value of New Zealand investment abroad fell $1.2 billion, while the value of foreign investment in New Zealand fell $2.0 billion. From June 2000 to June 2001, New Zealand's net International Investment Position has ranged between negative $83.5 billion to negative $88.3 billion.

Brian Pink Government Statistician

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