Current account swings further into the red

1.00pm

The current account swung deeper into the red during the June quarter, according to data released today by Statistics New Zealand.

The current account balance for the June quarter was a deficit of $1.788 billion, compared to a revised March quarter deficit of $149 million.

Statistics NZ said it revised the March quarter current account balance down from a surprise surplus of $174 million based on new or improved data.

For the June year, the current account balance was a deficit of $6.435 billion, or 4.6 per cent of gross domestic product (GDP).

This compared to a March year deficit of $6.022 billion, or 4.4 per cent of GDP. The previous June year's deficit was $5.239 billion, or 4 per cent of GDP.

The current account, also known as the balance of payments, measures New Zealand's dealings with the rest of the world including trade and "invisibles" such as debt payments.

Statistics NZ said rising imports of goods and higher income payments to foreign investors were the main factors behind the widening deficit for the quarter.

These factors were partially offset by increased returns from exports of goods -- higher expenditure from foreign tourists and higher receipts of non-resident withholding tax.

An increase in both import prices and volumes pushed up the value of goods imports in the June quarter by $872 million.

The depreciation of the New Zealand dollar, combined with rising petrol and oil prices saw import prices for merchandise rise 5 per cent over the period.

The Reserve Bank has said the trade-weighted index of the New Zealand dollar decreased by 4.4 per cent in the June quarter, against an increase of 4.7 per cent in the March quarter.

Goods export prices were up 7.2 per cent, while volumes rose 1.7 per cent.

The value of goods exports for the quarter rose by $560 million.

Overseas visitors to New Zealand were up a seasonally adjusted 6.7 per cent compared to the previous quarter.

Higher visitor spending drove up tourism receipts by $208 million.

At June 30, the country's net international debtor position was $109.2 billion, up $7 billion, or 6.9 per cent, on the same time last year.

The value of New Zealand's international investment had fallen $5.3 billion, or 6.2 per cent, at June 30, compared with March 31.

The June 30 value of foreign investment in New Zealand fell by $4.6 billion, 2.4 per cent, compared with March 31.

The fall featured a net inflow of foreign direct investment of $1.8 billion, which was more than offset by a net $5.7 billion withdrawal of foreign portfolios and other investment.

Statistics NZ said the key factors in these withdrawals were lower foreign holdings of Government and private sector bonds, and banks reducing their loans from abroad.

- NZPA