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Adjusted Balance of Payments Deficit Falls

Balance of Payments - June 2000 quarter

Seasonally Adjusted Balance of Payments Deficit Falls

The current account deficit for the June 2000 quarter was $1,392 million, Deputy Government Statistician Ian Ewing said. After adjusting for seasonal factors, the deficit fell by $91 million when compared with the March 2000 quarter. The trend shows a reducing deficit over both the March and June 2000 quarters, following a period of steadily increasing deficit balances since the December 1998 quarter.

The New Zealand dollar has depreciated against all the currencies of New Zealand's major trading partners over the same period. This mainly influenced the goods and services components.

Growth in the value of seasonally adjusted goods exports was the main contributor to an increased goods and services surplus between the March and June 2000 quarters. This was due to the lower New Zealand dollar combined with increased demand and higher prices for a number of export commodities. These increases more than offset increases in imports over the same period reflecting a rise in the price of crude oil and the lower New Zealand dollar.

Seasonally adjusted exports of services rose at a faster rate than imports of services, causing the services deficit to fall between the March and June 2000 quarters. Exports of services grew, the main contributor being an increase in international airfares purchased by overseas visitors and the lower New Zealand dollar.

The income deficit narrowed between the March and June 2000 quarters. The fall in the New Zealand dollar has contributed to higher interest expenses for New Zealand enterprises and lower dividends in foreign currency received by overseas investors on their New Zealand investments. The international investment income component is now compiled on the basis of the latest international standards, namely the fifth edition of the Balance of Payments Manual.

The changes to international investment income introduced this quarter resulted in a redistribution of investment income from direct investment to portfolio and other investment for the June 2000 quarter. These methodology changes have largely offset each other having no significant impact on the total investment income level.

The current account deficit for the year ended June 2000 was $7,540 million. This compares to $7,329 million for the year ended March 2000 and $4,165 million for the year ended June 1999.

Ian Ewing Deputy Government Statistician

END

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