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

 

Current Account Deficit Continues to Widen


Current Account Deficit Continues to Widen

The seasonally adjusted Balance of Payments current account deficit was $3,089 million in the September 2004 quarter, according to Statistics New Zealand. The deficit increased $1,109 million from the June 2004 quarter to the September 2004 quarter, and represents the third consecutive widening of the deficit. For the year ended September 2004, the deficit as a percentage of Gross Domestic Product (GDP) was 5.8 percent, compared with 4.8 percent for the year ended June 2004.

Lower exports of goods combined with higher income in the form of profits and interest payments earned by foreign investors in New Zealand were the main contributors to the widening of the current account deficit this quarter.

The $949 million fall in the value of goods exports in the September 2004 quarter was mainly due to a significant decrease in export volumes. All the main categories recorded decreases in export volumes this quarter, with dairy products (down 26.8 percent) recording the most significant fall. Expenditure by overseas visitors to New Zealand was the major contributor to the $101 million increase in seasonally adjusted services exports in the September 2004 quarter. A decrease in the seasonally adjusted number of visitors to New Zealand was more than offset by an increase in the average expenditure per visitor.

Higher income payments in the September 2004 quarter were the result of higher profits reported by New Zealand companies that are wholly or substantially owned by foreign direct investors, and by increased interest payments to overseas lenders. Of the higher profits, 76.9 percent were reinvested in the New Zealand companies. Higher interest payments this quarter reflected an increased level of overseas borrowing. ƒnƒnThe current account balance for the year ended September 2004 was a deficit of $8,246 million, compared with a deficit of $6,774 million for the year ended June 2004, and $5,668 million for the year ended September 2003.

A current account deficit is an excess of payments over receipts. Financing this deficit is achieved primarily through net inflows of foreign investment measured in the financial account of the Balance of Payments. Financing persistent current account deficits through net foreign investment into New Zealand has resulted in the net debtor position (international investment position) increasing. A net debtor position means that the level of foreign investment in New Zealand (liabilities) exceeds the level of New Zealand's investments abroad (assets). At 30 September 2004, New Zealand's net international debtor position was $118.2 billion, which is $7.5 billion (6.8 percent) higher than the 30 June 2004 net debtor position, and $11.0 billion (10.2 percent) higher than at 30 September 2003.

In the September 2004 quarter, valuation changes arising from the effects of an appreciating New Zealand dollar and changes in the market value of assets and liabilities (for example, changes in share prices) contributed $2.6 billion to the rise in the net debtor position. However, the most significant cause of the rise was a net flow of investment into New Zealand of $4.9 billion. This completely financed the current account deficit.

Foreign investment into New Zealand mainly comprised overseas funding of domestic banks, and an increase in the level of foreign holdings of New Zealand Government securities. This foreign investment into New Zealand of $13.4 billion completely offset $8.5 billion of New Zealand investment abroad during the quarter. The increase in New Zealand investment abroad was mainly from domestic banks lending abroad, and a rise in official reserve assets.

Brian Pink

Government Statistician

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

NZTA: Major New Zealand Upgrade Programme Projects Go To Tender

Two major New Zealand Upgrade Programme projects are beginning tenders for construction. The New Zealand Upgrade Programme is a $6.8 billion investment to get our cities moving, to save lives and boost productivity in growth areas. The first Auckland ... More>>

Reserve Bank: RBNZ Seeks To Preserve Benefits Of Cash

The Reserve Bank – Te Pūtea Matua is taking on a new role of steward of the cash system “to preserve the benefits of cash for all who need them”, Assistant Governor Christian Hawkesby told the Royal Numismatics Society of New Zealand annual conference ... More>>

ALSO:

Economy: Double-Dip Recession Next Year, But Housing Rolls On

New Zealand's economy is expected to slip back into recession early next year as delayed job losses, falling consumer spending, and the absence of international tourists bites into growth. More>>

ALSO:

Microsoft New Zealand: Microsoft Expands “Highway To A Hundred Unicorns” Initiative To Support Startups In Asia Pacific

New Zealand, 14 October 2020 – Today Microsoft for Startups launches the Highway to a Hundred Unicorns initiative in Asia Pacific to strengthen the region’s startup ecosystem. This follows the initiative’s success in India, where 56 startups were ... More>>

Fonterra: Farmers Taking Another Step Towards New Zealand’s Low Emissions Food Production

They’re hot off the press and intended to help take the heat out of climate change. Fonterra farmers are already among the world’s most sustainable producers of milk and now have an additional tool in their sustainability toolbox. Over the last few ... More>>

ALSO:

Electricity: New Zealand Remains In Top 10 For Energy Balance

The World Energy Council’s Energy Trilemma Index has become part of the energy dialogue both globally and in New Zealand. The Index illustrates the need for countries to balance energy security, energy equity and environmental sustainability. New Zealand ... More>>

ALSO:


Courts: Businessman Eric Watson Sentenced To A Four-Month Jail Term

New Zealand businessman Eric Watson has been sentenced to a four-month jail term in the UK for contempt of court, TVNZ reports. More>>

OECD: Area Employment Rate Falls By 4.0 Percentage Points, To 64.6% In Second Quarter Of 2020

The OECD area employment rate – the share of the working-age population with jobs – fell by 4.0 percentage points, to 64.6%, in the second quarter of 2020, its lowest level since the fourth quarter of 2010. Across the OECD area, 560 million persons ... More>>

Spark: Turns On 5G In Auckland And Offers A Glimpse Into The Future Of Smart Cities

Spark turned on 5G in downtown Auckland today and has partnered with Auckland Transport (AT) to showcase some of the latest in IoT (Internet of Things) technology and demonstrate what the future could look like for Auckland’s CBD with the power of 5G. 5G is ... More>>

Stats NZ: Monthly Migration Remains Low

Since the border closed in late-March 2020, net migration has averaged about 300 a month, Stats NZ said today. In the five months from April to August 2020, overall net migration was provisionally estimated at 1,700. This was made up of a net gain ... More>>

University of Canterbury: Proglacial Lakes Are Accelerating Glacier Ice Loss

Lake Tasman, New Zealand | 2016 | Photo: Dr Jenna Sutherland Meltwater lakes that form at glacier margins cause ice to recede much further and faster compared to glaciers that terminate on land, according to a new study. But the effects of these glacial ... More>>

ALSO:

Dairy: Fonterra Sells China Farms

Fonterra has agreed to sell its China farms for a total of $555 million (RMB 2.5 billion*1), after successfully developing the farms alongside local partners. Inner Mongolia Natural Dairy Co., Ltd, a subsidiary of China Youran Dairy Group Limited ... More>>

ALSO: