New Zealand increases investment with Australia

Embargoed until 10:45am  –  25 September 2008

Balance of Payments and International Investment Position: Year ended 31 March 2008  –  Media Release

The significance of New Zealand's investment partnership with Australia has increased in recent years, Statistics New Zealand said today. Australia is the single most important destination for New Zealand investment abroad and source of foreign investment into New Zealand.

The total level of investment in New Zealand at 31 March 2008 was $275.7 billion, with $87.5 billion (31.7 percent) sourced from Australia. The level of New Zealand’s investment abroad was $121.9 billion at 31 March 2008, of which investment in Australia was $34.1 billion (28.0 percent). At 31 March 2003, Australia was the source of 23.1 percent of the level of foreign investment in New Zealand, and the destination for 22.3 percent of New Zealand's level of investment abroad.

New Zealand's two other main international investment partners continued to be the United States of America (USA) and the United Kingdom (UK). At 31 March 2008, these two countries combined were the destination of 29.5 percent of New Zealand's investment abroad, and the source of 33.3 percent of foreign investment in New Zealand. Investment from the USA and the UK is partly the result of the New Zealand banking sector continuing to use these countries as funding sources.

Most of New Zealand’s international assets and liabilities continue to be held by the finance and insurance industry, although the manufacturing industry is also significant. Together, these industries held 76.6 percent of New Zealand’s assets abroad, and 68.9 percent of New Zealand’s international liabilities.

At 31 March 2008 New Zealand's foreign currency external debt was $109.9 billion. Of this debt, 92.2 percent was hedged in some way. Hedging manages risk – for example, due to changes in foreign currency exchange rates, which affect the New Zealand dollar equivalent value of that debt.

Statistics New Zealand also released the current account deficit to GDP ratio for the year ended June 2008 today. The year ended June 2008 current account deficit was 8.4 percent of GDP, and the revised current account deficit to GDP ratio for the year ended March 2008 was 8.0 percent.

Geoff Bascand
Government Statistician

25 September 2008

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