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Record dairy exports shrink current account deficit

Record dairy exports shrink current account deficit – Media release

19 March 2014

An increase in the value of dairy product exports has seen New Zealand record its smallest seasonally adjusted current account deficit since the March 2010 quarter, Statistics New Zealand said today.

The current account deficit was $0.8 billion in the December 2013 quarter, $1.7 billion smaller than in the September 2013 quarter.

"New Zealand exported record levels of dairy products this quarter, which drove the balance on goods and services to its highest-ever surplus" balance of payments manager Jason Attewell said.

However, an increase in New Zealand's investment income deficit partly offset the rise in goods exports. Foreign-owned companies in New Zealand earned their highest profits in four years, mostly due to higher profits earned by the corporate sector this quarter.

The annual current account deficit also fell, with increased exports of dairy products being the main contributor to this fall. The deficit fell to $7.5 billion (3.4 percent of GDP) for the year ended December 2013, down from $8.9 billion (4.1 percent of GDP) for the year ended September 2013.

The quarterly current account deficit was funded by a net inflow of foreign investment during the December 2013 quarter. Overseas investors increased their holdings of debt securities issued by New Zealand's banking sector over this time.

Despite the net inflow of foreign investment in the latest quarter, New Zealand's net international liability position fell to $147.6 billion (66.6 percent of GDP) at 31 December 2013. This compares with a net international liability position of $149.5 billion at 30 September 2013.

"Rising overseas share prices increased the value of New Zealand's overseas assets this quarter, while falling domestic share prices decreased the value of our overseas liabilities" Mr Attewell said.

ENDS

For more information about these statistics:
• Visit Balance of Payments and International Investment Position: December 2013 quarter
• Open the attached files
BalanceOfPaymentsDec13qtr.pdf
bopiipdec13qtralltables.xls

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