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Current account deficit widens to $2.0 billion

New Zealand's seasonally adjusted current account deficit widened to $2.0 billion in the December 2017 quarter, Stats NZ said today. The $407 million increase in the deficit was mainly driven by New Zealand importing aircraft and other transport equipment, and crude oil.

The seasonally adjusted goods deficit was $465 million for the December 2017 quarter, $385 million wider than in the September 2017 quarter.

“More transport equipment and crude oil imports both contributed to an increase in the goods deficit this quarter, despite more dairy and logs being exported,” international statistics senior manager Daria Kwon said.

Overseas merchandise trade: December 2017 has more detail.

The seasonally adjusted services surplus remained steady in the December 2017 quarter, at $1.2 billion, the same level as for the September 2017 quarter. Increases in New Zealanders’ spending abroad and overseas visitors’ spending in New Zealand were roughly the same, leading to a small drop in the services surplus.

Overall, the income deficit remained steady in the December 2017 quarter, widening only $6 million to $2.7 billion. Overseas investors had a larger increase in the income they earned from their New Zealand investments than that New Zealanders earned from their investments abroad.

"High levels of foreign direct investment income can indicate a strong New Zealand economy with higher profits for New Zealand-based companies," Ms Kwon said. The increase in the primary income deficit was mostly offset by a net inflow of secondary income, which includes tax paid by foreigners on their interest or dividends earned in New Zealand.

The current account balance records the value of New Zealand’s transactions with the rest of the world in goods, services, and income. New Zealand has a current account deficit when we spend more than we earn from our transactions with the rest of the world. To fund this deficit, we need a net inflow of investment from the rest of the world. This is reflected in the financial account.

The financial account showed a net inflow of $1.5 billion in the December 2017 quarter. This was driven by a withdrawal of New Zealand assets held abroad (an inflow of money into New Zealand), mainly due to The Treasury withdrawing debt securities.

New Zealand’s net international liability position at 31 December 2017 was $155.2 billion (54.8 percent of GDP), continuing a downward trend. Strong performance by overseas stock markets and valuation changes increased New Zealand’s overseas assets more than our liabilities.

Summary of Balance of payments: December 2017 quarter - video

View our video Balance of payments: December 2017 quarter


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