Balance of Payments
The current account deficit stood at 3.1% of GDP for the twelve months to September 2009 but had fluctuated in a range of 4.8% to 9.3% of GDP over the previous five years. A key feature of New Zealand's current account deficit is the large deficit on investment income, reflecting New Zealand's net foreign liability position.
The investment income deficit increased between June 2004 and June 2008, resulting in a widening current account deficit over the same period. Since late 2008, the investment income deficit has narrowed markedly, driven by lower profits accruing to overseas-owned firms operating in New Zealand as a result of weak domestic trading conditions.
The goods and services balance has varied due to the effects of drought, commodity price fluctuations, including oil price changes, some large one-off imports and currency movements, as well as New Zealand's demand for imports and international demand for New Zealand exports. The impact of the stronger currency on export earnings and strong domestic growth on import demand, together with an increase in the investment income deficit due to strong profits of foreign-owned firms, led to the current account deficit reaching 9.3% of nominal GDP in the year to 30 September 2006.
More recently, however, the combination of narrowing goods and services deficits and, in particular, a shrinking investment income deficit, led to the current account deficit falling from 8.7% of GDP in December 2008 to 3.1% of GDP in September 2009. The annual deficit is expected to have narrowed to 2.8% by the end of 2009, reflecting a further shrinking of the investment income deficit and exports growing stronger than imports. From 2010, the current account deficit is expected to widen as the pick-up in domestic demand flows through to stronger imports, while increased earnings for overseas-owned firms result in a deteriorating investment income deficit.
Balance of payments statistics are compiled by the Government following principles set out by the IMF in the 5th edition of the Balance of Payments Manual.
|
(dollars amounts in millions) Year ended 31 March |
|||||
|---|---|---|---|---|---|
| 2005 | 2006 | 2007 | 2008(1) | 2009(1) | |
| Current Account | |||||
| Export receipts | 31,114 | 31,581 | 35,636 | 38,720 | 44,259 |
| Import receipts | 33,343 | 35,685 | 38,464 | 40,515 | 45,594 |
| Merchandise balance | (2,228) | (4,104) | (2,828) | (1,796) | (1,337) |
| Services balance | 1,200 | 522 | 433 | 184 | (1,119) |
| Investment income balance | (9,384) | (11,065) | (11,906) | (13,343) | (13,035) |
| Transfers balance | 293 | 144 | 774 | 828 | 919 |
| Current account balance | (10,120) | (14,504) | (13,527) | (14,128) | (14,568) |
| Deficit as % of GDP | (6.7) | (9.0) | (8.0) | (7.8) | (7.9) |
| Financial Account (net) | |||||
| Foreign investment in NZ | 13,870 | 10,421 | 23,370 | 26,795 | (8,853) |
| NZ investment abroad | 3,222 | (3,790) | 11,120 | 12,500 | (16,122) |
| Reserves | (914) | 4,850 | 6,744 | 5,763 | (9,947) |
| Financial account balance | 10,648 | 14,211 | 12,250 | 14,295 | 7,269 |
| Capital Account | |||||
| Balance of Capital Account | 108 | (326) | (457) | (773) | (579) |
(1) Provisional.
- Balance of Payments
- Sources: Statistics New Zealand
