The reduction is driven by a decline in the services deficit
New Zealand’s annual current account deficit reached $30.6 billion, equivalent to 7.6% of GDP, for the year ended September, Stats NZ reported.
The latest figure reflects a narrowing of $0.6bn compared to the previous year – a reduction driven by a $4.1bn decrease in the services deficit, counteracted by a $2.5bn increase in the goods deficit and a $1.4bn expansion of the primary income deficit.
Services exports boost the services deficit reduction
Services exports surged by $9.3bn to $24.9bn in the year to September, with travel exports, driven by overseas visitors, rising $6.7bn to $11.1bn.
Since the easing of border restrictions, overseas visitor arrivals have continued to increase, from 690,000 to 2,770,000 in the year ended 30 September, contributing to higher tourism spending.
“More overseas visitors to New Zealand in the year ended September 2023 meant an increase in tourism spending, but levels are still below what they were before COVID-19,” said Jason Attewell (pictured above), general manager of economic and environment insights. “While not as large, spending by New Zealanders on overseas travel has returned to previous levels.”
Stats NZ also reported an increase in services imports in the year to September, up $5.2bn to $30.1bn. Travel imports, or spending by New Zealanders abroad, rose by $3.1bn to $6.2bn.
Goods imports contribute to the expanding goods deficit
Goods imports rose by $2.4bn to $84.1bn, while goods exports slightly decreased to $70.9bn. Non-crude fuel imports, including diesel, jet fuel, and petrol, significantly contributed to the increase in goods imports, rising by $3.5bn (52%).
Meat exports, primarily consisting of sheep meat and beef, experienced a decrease of $1.2bn (12%). This decline was partly offset by a $0.5bn (3%) rise in dairy exports.
Primary income deficit widens
The primary income deficit widened by $1.4bn to $12.3bn for the year ending September. Overseas investors earned more from their investments in New Zealand than New Zealand investors earned abroad. Over that period, income earned by overseas investors surged by $3.4bn, whereas income earned by New Zealand investors from overseas saw a $2.1bn increase.
Interest payments increased by $4.1bn to $11.7bn, while interest income increased $1.3bn to $6.6bn.
“In the September 2023 year, the rise in interest payments to overseas investors was more than double the rise in interest received from overseas,” Attewell said. “This reflects the structure of the New Zealand economy where our liabilities to the rest of the world are greater than our assets.”
Net international liability position
New Zealand’s net international liability position was $191.9bn, equivalent to 47.9% of GDP, at the end of September. This represents a $1.7bn narrowing compared to June. New Zealand’s international assets increased by $1bn, driven by a $6.7bn rise in reserve assets, while liabilities dropped $0.8bn compared with June.
Quarterly seasonally adjusted current account deficit
In the September 2023 quarter, the seasonally adjusted current account deficit widened to $7.4bn, reflecting both seasonal and non-seasonal factors impacting data patterns since the beginning of the COVID-19 pandemic. Unadjusted for seasonal variations, the real current account deficit expanded by $6.8bn, reaching $11.5bn.
Read the Stats NZ media release here.
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