Drought contributes to larger current account deficit

Drought contributes to larger current account deficit

18 September 2013

New Zealand's seasonally adjusted current account deficit was $2.2 billion in the June 2013 quarter, Statistics New Zealand said today. A fall in exports of goods increased the deficit in the current account by $0.1 billion.

A current account deficit means that New Zealand is spending more than it is earning from the rest of the world.

"This quarter we earned less from our dairy exports, due to the dry weather affecting production earlier in the year," balance of payments manager Jason Attewell said.

For the year ended June 2013, New Zealand's current account deficit narrowed to $9.1 billion (4.3 percent of GDP). The smaller deficit than for the March 2013 year (when it was 4.5 percent of GDP) was due to a fall in profit earned by foreign-owned companies in New Zealand.

International investment position stays flat

At 30 June 2013, New Zealand's net international liability position was $151.3 billion (71.1 percent of GDP), compared with a revised figure of $151.6 billion at 31 March 2013.

New Zealand's international investment position shows the difference between the value of New Zealand's investments abroad and the value of foreign investments in New Zealand. "While New Zealand's net international investment position remained flat over the June quarter, within that, government debt to the rest of the world fell," Mr. Attewell said.

Net government debt to the rest of the world fell by $4.5 billion, down to $7.8 billion (3.7 percent of GDP) at 30 June 2013.

The net international liability position includes outstanding overseas reinsurance claims (as New Zealand's assets) from the Canterbury earthquakes. At 30 June 2013, a total of $10.5 billion of these claims had been settled with overseas reinsurers, leaving $8.1 billion of claims outstanding.

For more information about these statistics: Visit Balance of Payments and International Investment Position: June 2013 quarter

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