NZ current account deficit jumps to $2.8 billion

New Zealand's current account deficit swelled to $2.85 billion in the June quarter, up from a revised $1.73 billion the previous quarter, Statistics New Zealand said today.

The current account, also known as the balance of payments, measures all New Zealand's transactions with the outside world.

The annual deficit was $11.89 billion, up from a revised $10.9 billion for the year-earlier. Economists estimate the deficit at 8 per cent of gross domestic product. The official ratio will not be available until September 28 when the latest GDP figures are announced.

The June quarter deficit was close to economists' forecasts.

The seasonally adjusted current account deficit was $3.02 billion in the June quarter, down from $3.17 billion in the March quarter.

The seasonally adjusted deficit for the year ended June widened to $11.9 billion, from a revised March quarter seasonally adjusted deficit of $10.9 billion.

SNZ said the main factors in the wider seasonally adjusted annual deficit was a rise in income paid to foreign investors in New Zealand -- because of higher reported profits and a rise in imports.

A 32.5 per cent rise in the price of petrol products in the June year was also a contributor.

The value of imports exceeded the value of exports in the June quarter, resulting in a deficit in the goods balance of $721 million, $32 million higher than the March quarter deficit.

The value of goods exported was $7.86 billion, 0.1 per cent higher than the value for the March quarter.

The value of good imported was $8.58 billion, up 0.4 per cent on the previous quarter.

Import prices were up 1.5 per cent between the March and June quarters, driven by petrol and petroleum prices, which rose 23.6 per cent.

As at June 30 New Zealand's net international investment position was $124.4 billion. This was made up of foreign investment in New Zealand of $222.4 billion and New Zealand investment abroad of $97.9 billion.

This equates to a debt of $30,355 for every New Zealander, up from $27,483 per capita at the same time last year.

New Zealand's net international debt at June 30 was $98.4 billion, down from $2.2 billion at March 31.

Net inflow of financial capital into New Zealand from overseas was $2.6 billion in the June quarter.

SNZ said that debt securities transactions and loan repayments on both sides of the financial account largely cancelled each other out.

ASB economist Kate Skinner said the deficit was broadly in line with expectations and there should be no short term economic implications.

"Over the medium term, however, the current account will likely weigh on the New Zealand dollar. Rather than being the initial catalyst, it's just that when the New Zealand dollar goes into a depreciating trend ... the current account result will exaggerate that depreciation," she said.

The New Zealand dollar faltered slightly after the release, dipping to US69.58c from US69.79 at 8.30am today.

- NZPA, REUTERS