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Current Account Surplus $732 Million in March 2002

Balance of Payments and International Investment Position: March 2002 quarter

Current Account Surplus $732 Million in March 2002 Quarter

Statistics New Zealand today reported a $732 million March 2002 quarter current account surplus. This compares with the December 2001 quarter deficit of $1,696 million. The current account statistics are influenced by seasonal factors, and after taking account of these, the March 2002 quarter current account balance is a deficit of $466 million. This is a $728 million smaller deficit than the December 2001 quarter seasonally adjusted deficit of $1,194 million. The smaller March 2002 quarter deficit follows increased deficits in the September and December 2001 quarters.

The main contributions to the decrease in the March 2002 quarter current account deficit were increased receipts from tourism and increased net investment income. March 2002 quarter earnings from foreign tourist expenditure in New Zealand rose $116 million on a seasonally adjusted basis, compared with the December 2001 quarter. This reflects increased numbers of tourists, and an increase in the average expenditure per tourist. The higher number of tourists has also contributed to an increase in earnings from transportation services, compared with the December 2001 quarter.

The March 2002 quarter investment income deficit decreased $542 million compared with the December 2001 quarter. The income attributed to foreign investors from their investments in New Zealand fell $375 million in March 2002 quarter compared with the December 2001 quarter. The December result reported higher returns to overseas investors, particularly from their New Zealand subsidiaries, while the March 2002 quarter result shows a return to levels similar to the period June to September 2001.

New Zealand's earnings from its investments abroad were $166 million higher in the March 2002 quarter than they were in the December 2001 quarter. Overseas subsidiaries of New Zealand companies have generated increased profits. New Zealand firms' overseas subsidiaries are now generally more profitable than 12 months ago.

The current account deficit for the year ended March 2002 was $2,672 million. This is 2.2 percent of gross domestic product (GDP), and compares with the March 2001 year ended deficit of $5,284 million, which was 4.7 percent of GDP. The latest estimate of the trend in the current account balance shows the deficit fluctuating since the June 2001 quarter. In the March 2002 quarter, a smaller income and transfers deficit was the main contribution to the smaller current account trend deficit.

The March 2002 quarter financial account shows that the net flow of foreign investment into New Zealand, and the net flow of New Zealand investment abroad, were in near balance. Bank lending abroad and investment in shares of overseas companies by New Zealand fund managers, were the main factors in the $2,926 million flow of New Zealand investment abroad. Foreign investment into New Zealand of $2,656 million during the March 2002 quarter featured an uptake of New Zealand securities by foreign investors, an increase in foreign investors deposits held at New Zealand banks, and a reduction of shareholdings in New Zealand companies by overseas investors acting through nominees.

New Zealand's net international investment position at 31 March 2002 was negative $92.3 billion. This net debtor position is within the range exhibited after 31 March 2001, of negative $91.6 billion to negative $94.1 billion.

Brian Pink Government Statistician END

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