Current Account Deficit $624 Million

The balance of payments current account deficit stands at $624 million, according to latest figures from Statistics New Zealand. This compares with the March 2002 quarter surplus of $836 million.

Taking into account the influence of seasonal factors, the June quarter current account balance is a deficit of $805 million. This is a $445 million larger deficit than the seasonally adjusted March 2002 quarter deficit of $360 million.

The main contribution to the larger seasonally adjusted current account deficit in the June 2002 quarter was an increase in the income and current transfers deficit. This was partially offset by an increase in the goods and services surplus.

A larger investment income deficit in the June 2002 quarter was the result of foreign investors earning more from their New Zealand investments, and a fall in the earnings of New Zealand investors from their investments abroad. Foreign investors' earnings rose $276 million in the June 2002 quarter compared with the March 2002 quarter, the main feature being higher profits reported by foreign-owned New Zealand companies. New Zealand's income from its overseas investments fell $197 million in the June quarter compared with the March 2002 quarter, mainly due to lower reported profits of overseas subsidiaries.

The June 2002 quarter seasonally adjusted goods surplus rose $64 million compared with the March 2002 quarter. Higher export volumes offset lower export prices to produce the $35 million increase in seasonally adjusted exports, supported by a $30 million fall in imports. The services surplus balance fell $22 million in the June 2002 quarter compared with the March 2002 quarter.

The main features were a $71 million fall in earnings from transport services, which offset a rise in travel receipts. The increase in the June 2002 quarter travel receipts reflects higher visitor numbers and expenditure compared with the June 2001 quarter. The fall in earnings from transport services in the June 2002 quarter compared with the previous quarter reflects changes in passenger fare prices and scheduled services. The current account deficit for the year ended June 2002 was $3,004 million, and compares with the June 2001 year ended deficit of $4,269 million. The latest estimate of the trend in the current account balance shows a deficit balance ranging between $587 million and $795 million over the five quarters since June 2001.

The net flow of New Zealand investment abroad in the June 2002 quarter was $146 million and featured a net withdrawal of New Zealand direct investment from overseas companies, and a net flow of new investment into overseas equity markets. The net inflow of foreign investment to New Zealand in the June 2002 quarter was $285 million, and featured net withdrawals of portfolio and other investment, which were more than offset by a net inflow of direct investment.

Brian Pink Government Statistician

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