Current Account Deficit Increases

Current Account Deficit Increases

The current account deficit for the December 2002 quarter stands at $1,892 million, according to Statistics New Zealand. After adjusting for seasonal variations in the pattern of importing and exporting, the December 2002 quarter current account balance is a deficit of $1,427 million. This seasonally adjusted deficit is $129 million larger than the September 2002 quarter deficit of $1,298 million, and is the third consecutive increase in the deficit.

The increase in the current account deficit was mainly due to a $223 million fall in the value of New Zealand's goods exports, which exceeded a $111 million fall in the value of goods imports.

This resulted in a $111 million reduction in the goods surplus, when compared with the September 2002 quarter. Falls in receipts for exports and payments for imports in part reflect the rising value of the New Zealand dollar.

The seasonally adjusted services surplus fell $26 million to reach $359 million in the December 2002 quarter.

Compared with the September 2002 quarter, the investment income deficit rose $95 million to reach $1,868 million in the December 2002 quarter, and was more than offset by a $105 million rise in the transfers surplus. The rise in the income deficit resulted from a $208 million rise in income attributed to foreign investors, which exceeded a $112 million rise in income earned from New Zealand's overseas investments. The rise in the surplus on transfers primarily reflected an increase in government receipts of non-resident withholding tax.

The latest estimate of the trend in the current account balance shows the deficit growing since the June 2002 quarter. This reflects a falling surplus in the goods and services trend. The trend deficit on the current account has approximately doubled since the June 2002 quarter.

At 31 December 2002, New Zealand's net international investment position was negative $100.9 billion. This 'net debtor' position (where New Zealand's international investment liabilities are greater than its international investment assets) was $1.6 billion larger than at 30 September 2002. The main factors causing the larger net debtor position were a reduction of New Zealand investment abroad, and a rise in financial derivative liabilities to overseas counterparties. Partly offsetting these factors was the effect of a rising New Zealand dollar, which reduced the value of New Zealand's foreign currency liabilities abroad by more than it reduced the value of New Zealand's foreign currency overseas assets.

Brian Pink

Government Statistician

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