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Frigate Has One-Off Effect On Balance Of Payments

Balance of Payments: December 1999 quarter

The December 1999 quarter current account deficit was $2,855 million ($2,224 million excluding the frigate HMNZS Te Mana, valued at $631 million), said Government Statistician Len Cook.

After adjustment for seasonal factors, the current account deficit increased $768 million to $2,625 million in the December 1999 quarter. Excluding the frigate the seasonally adjusted current account deficit increased $137 million to $1,994 million. Although there was an $876 million shift from surplus to deficit in the seasonally adjusted goods balance, excluding the frigate this shift was $245 million. Over the same period the seasonally adjusted services deficit reduced by $161 million, while the seasonally adjusted income and transfers deficit grew $53 million.

The December 1999 quarter seasonally adjusted services deficit was $56 million, compared with a deficit of $217 million in the September 1999 quarter. There were increased earnings from tourism, as overseas tourists were attracted to New Zealand by major events and the lower New Zealand dollar. The $53 million rise in the income and transfers deficit was mainly caused by a $133 million fall in general government transfers (mainly receipts of non-resident withholding tax), partly offset by a small fall in investment income attributed to overseas investors.

The estimate of the trend in the current account shows a steady deficit between $1.9 billion and $2.0 billion over the latest three quarters. Trend estimates aid identification of the underlying direction of the series by removing the effects of both seasonal and irregular effects (eg the frigate).

The current account deficit of $8,163 million for the year ended December 1999 was 8.0 per cent of GDP (7.4 per cent of GDP excluding the frigate). This compares with a $6,665 million deficit for the year ended September 1999, or 6.6 per cent of GDP and a $4,980 million deficit for the year ended December 1998, or 5.1 per cent of GDP.

Len Cook

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