KEY POINTS:
New Zealand's current account deficit worsened to $2.91 billion in the June quarter from $2.2 billion three months earlier, figures published today by Statistics New Zealand (SNZ) show.
The current account, also known as the balance of payments, measures all of this country's transactions with the outside world and was forecast at $3.25 billion by a Reuters survey of economists.
The annual deficit was $13.6 billion, slightly up on the $13.5 billion annual figure in the March quarter and down on the $14.6 billion for the year ended June 2006.
SNZ estimated that the deficit at 8.2 per cent of Gross Domestic Product.
The smaller deficit than a year ago was mostly due to an $821 million decrease in the goods deficit, caused by increased exports of dairy products, SNZ said.
The figures were better than many economists were expecting, with the median predictions in a Reuters poll being for a June quarter deficit of $3.25 billion and an annual deficit of $14.08 billion.
The ratio of the latest current account deficit as a proportion of GDP is not yet available, with latest GDP figures not due out until next week.
Seasonally adjusted, the current account deficit eased $162 million to $3.42 billion in the June quarter.
The lower deficit was caused by a smaller goods and services deficit and higher net inflows of current transfers, partly offset by a larger deficit on investment income, SNZ said.
The seasonally adjusted goods deficit decreased by $45 million in the June quarter, with the value of exports and imports both falling, due to the appreciating New Zealand dollar.
Imports of goods fell $349m from the March quarter, due mainly to a fall in merchandise import prices, SNZ said.
Goods exports were down $305m, with the main driver behind the fall being a fall in export prices, particularly for meat and wool. Partly offsetting those falls was a rise in dairy prices, driven by high world commodity prices.
Despite that price increase, the value of dairy exports in the June quarter was lower than the record reached in the March quarter.
Seasonally adjusted, the services surplus increased $43m, mainly due to visitors to this country spending more.
New Zealand's income deficit rose to $3.01 billion in the June quarter. A $259m increase in income earned by foreign investors in this country was partly offset by a $139m increase in income from New Zealand investments abroad, SNZ said.
Of the income earned by foreign direct investors in this country, $1.48b was paid overseas in dividends, while $239m was reinvested in New Zealand.
The June quarter's current account deficit was funded by a net capital inflow of $2.68b, as foreign investment in this country of $4.36b exceeded New Zealand investment abroad of $1.68b.
New Zealand's net international liability position at June 30 was $148.6b, an increase of $5.5b from the end of March.
More soon.
- NZPA
