22 December 2008
Current account deficit rises to 8.6 percent of GDP
For the year ended September 2008, the current account deficit was $15.5 billion (8.6 percent of GDP), Statistics New
Zealand said today. This annual deficit compares with a deficit of $15.0 billion for the year ended June 2008 (8.4
percent of GDP). The main driver of the increase in the September year deficit was an increase in the value of imports
of goods, mainly due to higher prices for petroleum and petroleum products.
The current account deficit for the September 2008 quarter, after adjustment for seasonal factors, was $4,079 million.
This deficit was $571 million smaller than the June 2008 quarter deficit. The smaller
September quarter deficit was mainly due to a reduction in the investment income deficit, and increased exports of
goods. In turn, the reduction in the investment income deficit was mainly due to a fall in income
earned by foreign direct and portfolio investors from their shareholdings in New Zealand companies. The rise in the
value of goods exports came mainly from increases in the value of dairy and forestry products.
The current account deficit in the September 2008 quarter was funded by a $5.4 billion net inflow of financial capital
from abroad. The inflow consisted of a $4.7 billion withdrawal of New Zealand investment from abroad, coupled with $753
million of foreign investment into New Zealand. The key feature of the withdrawal of New Zealand investment from abroad
was divestment of foreign reserve assets by the official sector (Reserve Bank of New Zealand and the New Zealand
Treasury).
At 30 September 2008, New Zealand's international assets totalled $131.2 billion, and international liabilities were
$297.1 billion, making the country's net debtor position $165.9 billion. This was $7.4 billion (4.7 percent) larger
compared with the position at 30 June 2008. The rise was due to the $5.4 billion net inflow of financial capital, and
$2.0 billion from the effects of changes in the valuation of New Zealand's international assets and liabilities. These
valuation effects reflect the volatility in world financial markets over the quarter. The volatility saw significant
falls in the value of shares, both in New Zealand and overseas, changes in the value of financial derivative contracts,
and the depreciation of the New Zealand dollar against most of the major currencies.
Geoff Bascand
Government Statistician
22 December 2008
ENDS