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Current account deficit increases

Current account deficit increases

Embargoed until 10:45am – 19 September 2012

New Zealand's seasonally adjusted current account deficit was $2.9 billion in the June 2012 quarter, Statistics New Zealand said today. This is $0.3 billion larger than the March 2012 quarter deficit.

The larger quarterly deficit was due to higher profits earned by foreign-owned banks in New Zealand.

"Overall, when compared with the latest quarter, more profits were paid out as dividends instead of being reinvested in New Zealand," balance of payments manager John Morris said.

For the June 2012 year, New Zealand's current account deficit was $10.1 billion (4.9 percent of GDP).

This compares with a deficit of $7.4 billion (3.8 percent of GDP) for the June 2011 year.

The larger annual deficit was mainly due to increased imports of goods over the year, as prices for petroleum and petroleum products rose. Foreign-owned banks also made higher profits over the year.

New Zealand's exports of services increased more than imports of services from the June 2011 year to the June 2012 year. Exports of personal, cultural, and recreational services were up $213 million over this time, mainly due to film production services.

"The Hobbit began filming in New Zealand in 2011, which provided a boost to exports of film production services," Mr Morris said.

New Zealand's quarterly current account deficit was funded by a net inflow of foreign investment in the financial account. Foreign investors continued to purchase New Zealand Government bonds, and banks received deposits from overseas in the latest quarter.

The net inflow of foreign investment was the main reason for the increase in New Zealand's net international liability position, which was $148.6 billion (72.6 percent of GDP) at 30 June 2012, up from $145.6 billion (71.9 percent of GDP) at 31 March 2012.

Statistics NZ has received new information on the value of overseas reinsurance claims resulting from the Canterbury earthquakes. Total overseas reinsurance claims are now valued at $17.9 billion, up from the $15.7 billion published previously.

Overseas reinsurers settled $1.3 billion of these claims during the June 2012 quarter, compared with $1.2 billion in the previous quarter. Overall, $5.1 billion of claims had been settled at 30 June 2012, leaving $12.8 billion of claims outstanding. Outstanding claims increase the value of New Zealand's overseas assets, which decreases New Zealand's net liability position.



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