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Balance of Payments and International Investment Position: March 2015 quarter
Embargoed until 10:45am  –  17 June 2015
Commentary

Current account deficit decreases

New Zealand’s seasonally adjusted current account balance was a deficit of $1,779 million in the March 2015 quarter, $751 million smaller than the deficit in the December 2014 quarter.

 

  

The fall in the deficit in the latest quarter was mainly due to a fall in income earned by overseas investors from their New Zealand investments, combined with a fall in imports of goods.  

Goods imports decrease more than goods exports

The balance of goods was a deficit of $90 million in the March 2015 quarter, down $313 million from the December 2014 quarter deficit. Imports decreased more than exports for the quarter.

The value of imported goods fell $463 million as imports of petroleum and petroleum products fell $680 million, to their lowest value since the December 2005 quarter. The fall was driven by a 28.7 percent decrease in prices for petroleum and petroleum products.

The value of exported goods decreased $150 million in the latest quarter, mainly due to a 6.3 percent fall in dairy prices.

Services surplus continues to increase as overseas visitors spend more

The balance on services was a surplus of $695 million in the March 2015 quarter, up $68 million from the previous quarter’s surplus. This rise was driven by an increase in exports of travel services, with overseas visitors spending more in New Zealand. Both the 2015 ICC Cricket World Cup, co-hosted by New Zealand, and Chinese New Year occurred during the March 2015 quarter, contributing to the increase in travel services exports.

See Goods and Services Trade by Country: Year ended  March 2015 for more detail on New Zealand's trade in goods and services for the year, including a by-country breakdown.

Primary income deficit decreases

The primary income deficit decreased $405 million in the March 2015 quarter, to $2,297 million. This is the smallest income deficit since the September 2013 quarter.

The smaller income deficit in the latest quarter was mainly due to foreign-owned companies paying fewer dividends to their overseas portfolio shareholders.

New Zealand-owned companies overseas earned higher profits during the quarter, which also contributed to the smaller income deficit. 

Large annual current account deficit

The annual current account deficit was $8.6 billion (3.6 percent of GDP) for the year ended March 2015. This compares with an annual deficit of $7.8 billion (3.3 percent of GDP) for the year ended December 2014.

The larger deficit in the year ended March 2015 was driven by a turnaround in the goods balance, from a surplus for the December 2014 year to a deficit in the latest year. Exports of goods fell $1.3 billion over this time, mainly due to a fall in dairy prices, while imports of goods remained relatively stable.

An increase in exports of services, mainly increased spending by overseas visitors to New Zealand, partly offset the falls in goods exports over the latest year.

 

 

$2.0 billion net outflow of investment from New Zealand

There was $2,027 million net outflow in investment in the March 2015 quarter. This net outflow was mainly due to the Reserve Bank of New Zealand increasing their reserve assets held overseas. This investment was mainly in short-term instruments, in anticipation of having to pay investors when their government bonds matured in April.

Overseas investors purchased debt securities issued by New Zealand’s banking sector in the latest quarter, partly offsetting the increase in reserve assets.

Net international liability position falls

The net outflow of investment from New Zealand drove the decrease in the net international liability position in the March 2015 quarter. The net liability position was $153.5 billion (64.2 percent of GDP) at 31 March 2015, down from $154.6 billion (65.0 percent of GDP) at 31 December 2014.

The value of New Zealand’s international assets and liabilities increased $15.7 billion and $14.6 billion, respectively, between 31 December 2014 and 31 March 2015. Transactions contributed, but the increases were also driven by changes in the value of financial derivative assets and liabilities, and rises in share prices abroad.

Net external debt decreases as external borrowing and lending increase

New Zealand’s net external debt position (this excludes equity and financial derivatives) was $138.9 billion (58.1 percent of GDP) at 31 March 2015. This is $2.0 billion less than the $140.9 billion (59.3 percent of GDP) net external debt position at 31 December 2014. New Zealand's external lending increased by more than external borrowing in the latest quarter.

 

 

For more detailed data see the Excel tables in the 'Downloads' box.

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