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Further Reduction in BoP Deficit

Balance of Payments: September 2000 quarter

Further Reduction in BoP Deficit

The current account deficit for the September 2000 quarter was $2.1 billion, Government Statistician Brian Pink said today. After adjusting for seasonal factors, the current account deficit recorded its third consecutive quarterly decrease. This decrease was the result of a $105 million rise in the goods and services surplus combined with a $102 million fall in the income and current transfers deficit.

Goods exports rose at a faster rate than goods imports for the third consecutive quarter, causing the rise in the goods and services surplus. The New Zealand dollar depreciating against the currencies of our main trading partners and higher world prices for crude oil pushed up prices for both exports and imports of goods. Over the same period, the services balance has remained relatively flat.

The income deficit fell $84 million and the current transfers surplus rose $18 million, resulting in a decrease in the income and current transfers deficit. This is the second consecutive fall in the income deficit, driven by a decrease in returns that foreigners received from their investments in New Zealand.

The current account balance trend has now returned to the $1.0 billion to $1.5 billion deficit band that it occupied in the mid-1990s. The trend for the goods and services balance has remained in surplus in the September 2000 quarter and has returned to levels that it occupied in the mid-1990s. The decrease in the deficit for the income and current transfers balance trend over the latest two quarters has been driven by the investment income balance, while the current transfers balance remains relatively flat.

The current account deficit for the year ended September 2000 was $6,911 million. This compares with a $7,336 million deficit for the year ended June 2000 and a $4,927 million deficit for the year ended September 1999.


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