New Zealand's Current Account Deficit Narrows As Imports Fall In Second Quarter

Sep 20, 2007 - New Zealand's second quarter current account deficit stood at NZ$3.415 billion, down NZ$162 million from the previous quarter, the Statistics New Zealand said Thursday. The fall in current account deficit was attributed to smaller trade deficit and higher net inflows of current transfers. Meanwhile, investment income showed larger outflow during the June quarter.

The seasonally adjusted trade deficit in goods fell NZ$45 million to NZ$767 million, while services surplus rose NZ$43 million to NZ$177 million in the second quarter.

This value of exports and imports of goods fell due to the appreciating New Zealand dollar in the second quarter, the report said. Imports fell more than exports, reflecting lower consumption of foreign goods.

The value of imports was NZ$9.473 billion in the June quarter, a decrease of NZ$349 million in the prior quarter. The value of goods exports fell NZ$305 million to NZ$8.706 billion over the same period.

Investment income earned by foreigners increased due to higher dividend payout amounting to NZ$1.483 billion.

New Zealand's current account deficit was funded by a financial net inflow of NZ$2.7 billion in the June quarter. This combined with NZ$2.9 billion of net changes in the valuation of international assets and liabilities, pushed New Zealand's net international debtor position by 3.9% to NZ$148.6 billion from the previous year.

The rise in net international position was contributed mainly by the banking sector. The net international debt position of the corporate sector also rose in recent quarters due to merger and acquisition activity.

For the year ended March 2007, the current account deficit was revised down to NZ$13.5 billion from the initial deficit of NZ$13.9 billion. The deficit was equivalent of 8.5% of GDP in the first quarter. The GDP ratios for the latest data will be released on September 27, the report said.