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Highest current account deficit since 2008 global financial crisis
Embargoed until 10:45am  –  14 June 2017

Balance of Payments and International Investment Position: March 2017 quarter  –  Media Release

Record imports in the first three months of 2017 contributed to the largest quarterly current account deficit since December 2008, Stats NZ said today. New Zealand had a seasonally adjusted current account deficit of $2.8 billion for the March 2017 quarter, $1.1 billion wider than the December 2016 quarter deficit. It was the biggest quarterly deficit since the global financial crisis hit world markets in 2008.

For the year ended March 2017, New Zealand’s annual current account deficit was $8.1 billion (3.1 percent of GDP). As a percentage of GDP, this is the same as the deficit for the year ended March 2016 ($7.8 billion).

The current account balance records the value of New Zealand’s transactions with the rest of the world in goods, services, and income. When we have a current account deficit, it implies foreigners earn more from New Zealand than we earn from overseas economies.

The goods deficit widened by $404 million to reach $1.2 billion for the March 2017 quarter, the biggest goods deficit since the June 2008 quarter. "New Zealanders spent more on imports of goods this quarter than we earned from our exports of goods," said international statistics senior manager Daria Kwon. "The increased spending on goods, like cars and machinery, led to a record high value of imports this quarter."

New Zealand’s income from direct investment abroad decreased to $299 million due to a fall in profits by overseas subsidiaries. New Zealanders reinvested a majority of these profits overseas, while withdrawing the rest as dividends during the quarter.

Direct investment income earned by foreign investment in New Zealand increased to $2.3 billion due to a rise in profits earned by New Zealand companies. This quarter, foreign investors in these companies received $1.1 billion in dividends, while $901 million of profits were reinvested in New Zealand.

There was a $2.0 billion net inflow of investment in the March 2017 quarter, with banks at the centre of transactions. There was a $2.5 billion withdrawal of financial assets held overseas as banks decreased their holdings in other investment assets such as currency and deposits. Financial liabilities decreased as banks settled debt securities held overseas.

At 31 March 2017, New Zealand investment abroad (financial assets) was a record high of $242.8 billion, due to overseas share price movements increasing the value of our assets. Foreign investment in New Zealand (financial liabilities) was valued at $397.6 billion. This means New Zealand had a net international liability position of $154.8 billion (58.5 percent of GDP).

Capital account

For the March 2017 quarter the capital account surplus was $3.0 million, down from $804 million in the previous quarter. The December 2016 quarter reflected the Kaikōura earthquakes reinsurance claims. This quarter we have revised reinsurance claims related to these earthquakes. We will continue to adjust this figure as more information comes in.

Ends

For media enquiries contact: Nicola Growden 04 931 4771, Wellington , info@stats.govt.nz
Authorised by Liz MacPherson, Government Statistician, 14 June 2017

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