KEY POINTS:
New Zealand's current account deficit worsened to $6 billion in the September quarter, Statistics New Zealand (SNZ) figures published today show.
The current account, also known as the balance of payments, measures all of New Zealand's transactions with the outside world.
The annual deficit was $15.5b, which was 8.6 per cent of gross domestic product, up from 8.4 per cent of GDP in the June year. In the September 2007 year the $14.9b deficit equated to 8.7 per cent of GDP.
The figures were in line with economists' forecasts in a Reuters poll.
The main factor swelling the September year deficit was an increase in the value of goods imports, mainly due to higher prices for petroleum and petroleum products, SNZ said.
Since the September 2007 year, the goods deficit had decreased $912m, while the investment income deficit was up $867m. The balance on services went from a surplus of $430m for the September 2007 year to a deficit of $471m for the September 2008 year.
RBC Capital Markets senior economist Su-Lin Ong said exports were under pressure from falling commodity and dairy prices, while import values were lifted in part by the weaker New Zealand dollar.
The deficit was heading in the wrong direction.
TD Securities senior strategist Joshua Williamson said that while the deficit was in line with expectations, it was still much larger than the second quarter.
"This shows that the external imbalances are widening. This is becoming more of a concern, more so because we are expecting a severe and prolonged recession in New Zealand."
The deficit should narrow next year, with fewer imports as the economy slowed.
Seasonally adjusted, the September quarter deficit was $4.1b, $571m smaller than the June quarter deficit.
The drop in the seasonally adjusted deficit was mainly due to a reduction in the investment income deficit, and increased goods exports, SNZ said.
Seasonally adjusted, the goods deficit in the September quarter was $898m. Exports of goods were up $408m, with imports up $226m, compared to the June quarter.
This country's net debtor position of $165.9b at the end of September was $7.4b, or 4.7 per cent, larger than at the end of June.
Exchange rate and asset price volatility contributed $2b to the increase in the net debtor position, arising from the depreciating New Zealand dollar, falling share prices, and changes in the value of financial derivative contracts, SNZ said.
The $14.8b, or 9.8 per cent, rise in New Zealand's net debtor position from the end of September 2007 was driven by a $18.4b rise in net overseas debt, partly offset by a $3.6b fall in the net equity debtor position.
Net overseas debt is now $154.1b, representing 85.8 per cent of GDP.
The investment income deficit was $3.2b in the latest quarter, $396m smaller than in the June quarter.
The decrease was driven by a fall in income earned by foreign investors from their shareholdings in New Zealand companies, while income from investment abroad was relatively stable, SNZ said.
- NZPA
