Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Balance of Payments and International Investment

23 March 2005

Balance of Payments and International Investment

Position: December 2004 quarter

Year-ended Current Account Deficit Continues to Widen

The seasonally adjusted current account balance was a deficit of $2,513 million in the December 2004 quarter, according to Statistics New Zealand. This is $442 million lower than the September 2004 quarter deficit of $2,955 million. On a year-ended basis, the deficit continued to widen and reached $9,385 million (6.4 percent of Gross Domestic Product (GDP)), compared with $5,630 million for the year ended December 2003 (4.2 percent of GDP). The current account deficit represents the net value of New Zealand's international transactions in goods, services, income and current transfers.

The main factors contributing to the wider year-ended current account deficit were: an increase in income payable to foreign investors in New Zealand due to higher reported profits; and an increase in the imports of goods.

The main factors contributing to the narrower current account deficit this quarter were: an increase in receipts from goods exports; an increase in earnings from New Zealand investment abroad; and a fall in income payments to foreign investors in New Zealand. Partly offsetting these factors was an increase in imports of goods.

The net inflow of foreign investment into New Zealand was $5.5 billion in the December 2004 quarter. The main contributors to this net inflow were increases in foreign borrowing by New Zealand banks, the New Zealand Government and by the private sector. Part of the increased bank borrowing from abroad was used to fund mortgage lending in New Zealand. The increase in foreign holdings of New Zealand debt securities is due to attractive returns to investors.

New Zealand's current account deficit is financed by inflows of investment from abroad, recorded in the financial account. New Zealand has recorded persistent current account deficits, and this has resulted in a level of foreign investment in New Zealand that exceeds New Zealand's investment abroad –a net debtor position.

New Zealand's net debtor position was $123.5 billion at 31 December 2004, an increase of $17.4 billion compared with 31 December 2003. The December 2004 net debtor position comprises net international debt (lending to overseas less borrowing from overseas) of negative $94.5 billion, and net equity (New Zealand ownership of overseas company shares less foreign ownership of New Zealand company shares) of negative $29.0 billion.

The main growth in New Zealand's net debtor position has been from a rise in the net international debt position to $94.5 billion (64.6 percent of GDP) at 31 December 2004, from $80.4 billion (59.6 percent of GDP) at 31 December 2003. Of this rise, $10.8 billion (76.6 percent) could be attributed to an increase in the New Zealand banking sector's net international debt.

Brian Pink

Government Statistician


© Scoop Media

Business Headlines | Sci-Tech Headlines


I Sing The Highway Electric: Charge Net NZ To Connect New Zealand

BMW is turning Middle Earth electric after today announcing a substantial contribution to the charging network Charge Net NZ. This landmark partnership will enable Kiwis to drive their electric vehicles (EVs) right across New Zealand through the installation of a fast charging highway stretching from Kaitaia to Invercargill. More>>


Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>


Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>


Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>


Half A Billion Accounts, Including Xtra: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>


Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news