Current Account Deficit Widens

Current Account Deficit Widens

The Balance of Payments current account deficit recorded a seasonally adjusted increase of $557 million in the June 2003 quarter, according to Statistics New Zealand. The deficit represents the difference between New Zealand's total overseas earnings and payments during the quarter. This widening deficit follows reducing deficits in the March 2003 and December 2002 quarters.

Lower export volumes combined with higher import volumes were the main contributors to the widening deficit. Lower volumes of wool, wood pulp and lamb skins, dairy products and meat were the main contributors to the fall in exports. Increased volumes of passenger motor cars, goods for further processing and capital equipment were amongst the main contributors to the increase in imports.

An appreciating New Zealand dollar over the June 2003 quarter reduced both the prices paid for imports and New Zealand dollar returns from exports of goods. The combined effect of the volume and price changes was to reduce the value of June goods exports by a seasonally adjusted $252 million (3.4 percent) and increase June goods import values by $231 million (3.1 percent).

A fall in the number of overseas visitors to New Zealand was the main cause of a fall in earnings from tourism and international travel. Concerns relating to SARS appear to have contributed to lower demand for international travel.

The current account deficit for the year ended June 2003 stands at $5,887 million, $2,717 million larger than the June 2002 year ended deficit.

Statistics New Zealand has also released the latest statement of New Zealand's financial position with respect to the rest of the world. New Zealand's net international debtor position (excess of international liabilities over international assets) fell by $2.7 billion (2.6 percent) in the June 2003 quarter. A combination of rising share prices overseas and increased investment activity pushed the value of New Zealand investment abroad up by $3.4 billion. This was partly offset by a $0.7 billion rise in the value of foreign investment in New Zealand, the result of a combination of reducing investment activity and changes in value including rising share prices in New Zealand, and the rising New Zealand dollar.

Brian Pink

Government Statistician

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