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


Deutsche Bank: NZ Current Account - Sept Q

Data Flash (New Zealand)
NZ Current Account - September Quarter 1999

Key Points

The current account deficit for the year to September 1999 increased to $6.6bn (estimated at 6.5% of GDP), from the revised deficit of $6.2bn in the June 1999 quarter (6.2% of GDP).

This compared with average market expectations for an annual deficit of $6.8bn - with the forecast error due to a better-than-expected September quarter. There were only minor revisions to historical data.

On an annual basis, the deterioration in the deficit largely reflected:

a sharp decline in the trade surplus, with a strong increase in the imports more than offsetting a comparatively modest improvement in the export performance;

a worsening in the international investment position, primarily due to a rise in debits from increased earnings from NZ-located enterprises that are foreign owned;

Partially offsetting these negatives, the services balance improved reflecting an increase in overseas visitor numbers and a modest rise in transfers on the back of a rise in non-resident withholding tax received from overseas.

Market Reaction: The NZD strengthened immediately following the release to around 0.5100.

Current Account (year ended)
:::::::::::::::::::::::::::: Dec98::::Mar99:::: Jun99:::: Sep99

Merchandise Exports::::22,408::::22,468::::22,663::::22,912

Merchandise Imports::::20,992::::21,344::::21,983::::22,824

Trade Balance:::::::: 1,730::::1,465:::: 1,054:::: 472

Services Exports:::: 6,954::::7,437:::: 7,609:::: 7,735

Services Imports:::: 8,475::::8,657:::: 8,562:::: 8,538

Services Balance:::: -1,521::::-1,220:::: -953:::: -803

Total Investment Credits 812:::: 314:::: 29:::: 208

Total Investment Debits 6,621::::6,707:::: 6,915:::: 7,153

Investment Income Bal -5,809::::-6,393::::-6,886::::-6,945

Current Account Bal::::-4,978::::-5,696::::-6,216::::-6,610

% of nominal GDP:::: -5.0:::: -5.8:::: -6.2:::: -6.5

Source: DB Global Markets Research, Statistics NZ


With the annual deficit and its components broadly in line with expectations, there was little new information in today's release. However, the somewhat smaller-than-expected deficit provides a marginally better starting position for the deterioration that is forecast over coming quarters. Due to the combination of a continued strength in domestic demand, high oil prices, the importation of aircraft and a naval frigate, as well as a relatively slow export recovery, we expect the current account deficit to rise above 7.5% in the December quarter. Thereafter, the balance of payments is expected to show only a gradual improvement, with the deficit projected to remain above the 6% level over the next two years.

While we expect the trade balance to improve on the back of a stronger export performance and more favourable terms of trade, a deterioration in the investment income balance is expected to provide a partial offset. The investment debits will rise faster than nominal GDP, due to rising world interest rates and a recovery in the profitability of foreign-owned corporates in New Zealand.

The stubbornly high deficit outlook is expected to lead to a S&P rating downgrade in early 2000 (most likely following the release of the February Budget Policy Statement) and continued pressure on the medium-term performance of the NZD.

The markets' attention is now focused on the release of September quarter GDP data (Thursday, 23 December). While our central forecast is for an increase of +2.3% qoq, we attach a significant probability to an upward revision of the June quarter GDP figure and a correspondingly lower September quarter rise - with the exact quarterly pattern irrelevant for the level of the output gap at the end of the period. An overall June/September increase of 2.0% is consistent with our estimate of the underlying performance of the economy over that period.


This, along with an extensive range of other publications, is available on our web site

In order to read our research you will require the Adobe Acrobat Reader which can be obtained from their website for free.

For answers to your EMU questions, check Deutsche Bank's EMU web site or email our helpline

© Scoop Media

Business Headlines | Sci-Tech Headlines


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news