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Balance of Payments

The annual current account deficit was 4.1% of GDP in the year ended September 2013.

Following the GFC, the combination of a rapid turnaround in the goods balance and a shrinking investment income deficit, led to the current account deficit to fall to 1.4% of GDP in the year ended March 2010. In 2011 and 2012 the deficit widened again, owing to a widening in the annual income deficit and a narrower goods and services surplus (driven by falling commodity prices and an appreciating exchange rate).

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 which stood at -69.5% of GDP in the 2013 September year. After late 2008, the investment income deficit narrowed markedly, driven by lower profits accruing to overseas-owned firms operating in New Zealand as a result of weak domestic trading conditions. Another factor was lower interest payments flowing to holders of New Zealand debt as the result of lower interest rates both domestically and internationally.

In the 2013 September year, lower profits flowed to overseas-owned firms, reducing the income balance deficit and offsetting deteriorations in the goods and service balances. 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.

Table 17 - Balance of Payments
Year ended 30 September
(dollar amounts in millions)
2009 2010 2011 2012 2013

Current Account

         
Export receipts      42,452 42,331 47,580 47,572 46,616
Import receipts      41,021 39,595 45,085 46,781 46,904
Merchandise balance 1,431 2,736 2,494 792 (288)
Services balance 2,276 2,207 1,245 1,677 1,093
Income balance (9,151) (9,753) (10,280) (9,787) (8,984)
Transfers balance 469 87 (238) (426) (585)
Current account balance  (4,974) (4,721) (6,780) (7,744) (8,765)
Deficit as % of GDP    (2.7) (2.4) (3.3) (3.7) (4.1)

Financial Account (net)

         
Foreign investment in NZ (6,443) 12,899 19,176 (1,737) 5,365
less NZ investment abroad   (1,978) 11,540 19,068 (6,968) 4,105
Financial account balance (4,465) 1,359 108 5,231 1,260

Capital Account

         
Capital account balance 490 4,630 13,629 (561) (180)

Source: Statistics New Zealand

Figure 4 - Balance of Payments
Figure 4 - Balance of Payments.
Sources: Statistics New Zealand, the Treasury
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