KEY POINTS:
New Zealand today posted a $3.93 billion deficit in the December quarter, down from $4.67 billion in the September quarter.
The deficit was below economists' forecasts of $4.1b.
The annual deficit eased to $14.4b in the December year from $14.5b in the year to September.
The current account,
also know as the balance of payments, measures all of New Zealand's transactions with the outside world.
Statistics New Zealand (SNZ) said the December quarter figure amounted to 9 per cent of gross domestic product (GDP), and the September quarter to 9.2 per cent.
The last time the proportion of GDP reduced was in the March 2003 quarter, when the figure was 3.6 per cent.
Seasonally adjusted, the current account deficit for the December quarter was $3.5b, up $329 million from the September quarter, but still below those from the second half of 2005 and the first quarter of 2006.
SNZ said the rise in the adjusted figure between the September and December quarters was mostly due to higher earnings by foreign investors on their New Zealand investments.
Income earned by foreign investors in this country increased by $385m in the December quarter.
That was mainly due to an increase in profits reported by foreign-owned New Zealand companies, particularly in the banking sector, as well as an increase in portfolio income from dividends and interest payments, SNZ said.
The goods deficit increased $82m to $792m in the December quarter, due to the value of exports decreasing $346m to $8.7b, which was more than the $264m decrease to $9.5b in the value of imports.
Those factors were partly offset by a $123m increase to $134m in the services surplus, taking total exports of services for the December quarter to $3.1b.
The latest estimate of the current account balance trend showed a return to a widening of the deficit, following three consecutive quarters of improvement, SNZ said.
Both merchandise export prices and volumes recorded decreases in the December quarter, with the largest falls in export volumes in dairy products and non-food manufactures.
Dairy products were also the main goods category contributing to the fall in export prices, SNZ said.
With imports, merchandise prices fell 6 per cent in the quarter -- the largest fall since the March 2001 quarter.
The price of petroleum and petroleum products fell 20.8 per cent, following six consecutive quarters of price rises.
The fall in import prices was partly offset by a rise in volumes, with the textiles, clothing and footwear category, and electrical machinery and apparatus contributing most to the rise.
The December quarter current account deficit was funded by a financial account net inflow of $3.8b.
The country's investment income deficit was $3.1b in the December quarter, $381m up on the September quarter.
Income from New Zealand investments abroad was $653m, little changed from $648m the previous quarter.
As at December 31, New Zealand had a net debtor position of $143.2b, consisting of $103.9b of international assets and $247.1b of international liabilities.
The net debtor position was $5.8b (4.2 per cent) larger than the September 2006 position of $137.4b.
- NZPA
