National Saving Falls

Embargoed until 10:45am – 16 November 2006

National Saving Falls

Gross domestic product (GDP) in current prices increased 5.0 percent for the year ended March 2006, Statistics New Zealand said today. This follows a 6.9 percent increase in the previous March year.

The latest release of the consolidated accounts of the nation recorded the lowest level of national saving since the March 2000 year. National saving fell to $2.3 billion from the recent highs of $5.5 billion in 2005 and $7.3 billion in 2004.

National disposable income, which measures the total income available to New Zealanders (from all sources, both domestic and overseas) for consumption or saving, rose 3.9 percent following a 5.3 percent rise in the March 2005 year. Household and business income continued to rise, with compensation of employees (primarily wages) up 7.0 percent and profits up 2.5 percent. Increased final consumption (up 6.9 percent) by households and government eroded national saving on the back of falling agricultural profits and lower export growth.

External financing of capital investment increased further, with net borrowing from the rest of the world up from $10.8 billion (7.3 percent of GDP) in the March 2005 year to $15.2 billion (9.8 percent of GDP) in 2006.

Capital investment in fixed assets increased 6.7 percent, driven by strong growth in non-residential building, which increased 23.2 percent and 24.6 percent in the March 2006 and March 2005 years, respectively.

Residential building showed the lowest increase (up 2.1 percent) since the year ended March 2001.

Within the external account, the current account deficit rose from $10.9 billion to $14.9 billion in the March 2006 year. A key factor was the deteriorating trade balance for both goods and services, which recorded a deficit of $4.2 billion in the March 2006 year, following a deficit of $1.6 billion in the March 2005 year. Also contributing were higher share dividends and interest flows to non-residents.

Brian Pink
Government Statistician

ENDS

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