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Balance of Payments

The current account deficit stood at 3.5% of GDP for the 12 months to June 2015. 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.

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 1.5% 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). The current account deficit remained relatively steady in 2013, as the effect of rising commodity export prices was offset by lower growth in export volumes owing to the late-summer drought. The deficit increased to 3.3% in the year to September 2015, reflecting the decline in export prices and slowdown in trading partner growth. The current account deficit is expected to widen again to around 6% in 2016, owing to lower commodity export prices and lower agricultural exports, before narrowing again as prices recover.

A key feature of New Zealand's current account deficit is the large deficit on the primary income balance, reflecting New Zealand's net international investment position which stood at -61.9% of GDP in the year to September 2015. The investment income deficit narrowed markedly, driven by lower profits accruing to overseas-owned firms 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.

The goods and services balance has varied historically owing 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 goods and services balance has generally remained in surplus after the GFC, partly as lower growth in domestic demand affected imports.

Balance of payments statistics are compiled by the Government following principles set out by the IMF in the 6th edition of the Balance of Payments Manual.

Table 17 - Balance of Payments
Year ended 30 September
(dollar amounts in millions)
2011 2012 2013 2014 2015

Current Account

Export receipts 47,257 47,296 46,363 51,518 49,248
Import receipts 44,767 46,562 46,727 48,459 51,151
Merchandise balance 2,490 736 (363) 3,058 (1,902)
Services balance 1,215 1,355 1,020 971 3,307
Income balance (10,259) (9,538) (8,467) (9,508) (9,309)
Transfers balance (211) (364) (478) (433) (197)
Current account balance (6,765) (7,811) (8,288) (5,913) (8,103)
Deficit as % of GDP (3.2) (3.6) (3.7) (2.5) (3.3)
Net International Investment Position1 (143,467) (147,430) (148,344) (151,399) (150,962)
NIIP as % of GDP[1] 68.7 (68.2) (66.9) (63.8) (61.9)
Financial Account (net)          
Foreign investment in NZ 16,149 (5,073) 109 11,574 1,042
less NZ investment abroad 18,176 (12,226) (964) 9,853 2,512
Financial account balance (2,027) 7,153 1,073 1,721 (1,470)

Capital Account

Capital account balance 14,229 25 12 12 383

Source: Statistics New Zealand

  • [1]End of period
Figure 4 - Balance of Payment
Figure 4 - Balance of Payment.
Sources:  Statistics New Zealand, the Treasury
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