Current account deficit narrows as Kiwis import less

A fall in the volume of goods being imported drove the narrowing deficit. Photo / Mike Scott

New Zealand’s seasonally adjusted current account deficit narrowed by $0.9 billion to $6.2b in the September 2024 quarter, according to figures released by Stats NZ today.

The current account is a measure of the money flowing into and out of the country. It includes the inflow of foreign exchange we earn from exports and the outflow we spend on imports. It also includes things like business profits and investments flowing in and out of the country.

The annual current account deficit was $27b (6.4% of GDP) in the year ended September 30, 2024, Stats NZ said.

This compares with a $27.6b deficit in the year ended June 30, 2024 (6.6% of GDP). That was marginally better than ANZ economists had expected (forecasting 6.5% of GDP).

The deficit has been improving slowly since it reached a worrying 8.8% of GDP in March 2023.

Anything above 10% would be viewed negatively by financial markets and might see the country receive a credit downgrade – pushing up borrowing costs.

A fall in the volume of goods being imported drove the narrowing deficit.

“In the September 2024 quarter, the seasonally adjusted goods deficit narrowed by $0.7 billion to $1.9 billion, driven by a $0.8 billion fall in goods imports,” Stats NZ international accounts spokeswoman Viki Ward said.

“In the September 2024 quarter, New Zealand imported fewer cars than last quarter. Also contributing to the fall was transport equipment imports, with no defence aircraft imported. There was a higher volume of petrol imports in this quarter.”

Goods exports decreased by $101 million, driven by lower volumes of meat and casein.

The services deficit narrowed by $107m to $397m. Services exports (including tourism) increased by $225m, while services imports increased by $119m.

The overseas earnings of New Zealand investors increased by $236m, while the earnings of overseas investors in New Zealand increased by $176m.

“In the September 2024 quarter, New Zealand investors earned more dividends and interest from investments in international markets than overseas investors did from New Zealand,” Ward said.

In the September 2024 quarter, the financial account recorded a net inflow of $2.1b from overseas investors, which partly funded the current account deficit.

At September 30, 2024, New Zealand’s net international investment liability position was $208.6b (49.5% of GDP), $5.7b wider than $202.9b (48.3% of GDP) as at June 30, 2024.

The net international investment position represents the difference between New Zealand’s financial assets and liabilities with the rest of the world.

New Zealand has a net liability position as it has more liabilities with the rest of the world than assets.

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.