This driven by a reduction in services and goods deficit
New Zealand’s current account deficit shrank to $27.8 billion, or 6.9% of GDP, in 2023, a significant decrease from the $33.4bn deficit, or 8.8% of GDP, recorded in 2022, according to the latest Stats NZ figures.
A current account deficit means New Zealand spends more abroad than it earns, with its proportion of GDP highlighting its impact on the national economy.
Driving factors behind the improvement
A $6.1bn reduction in the services deficit and a $0.3bn decrease in the goods deficit contributed to the narrowing deficit, despite an increase of $0.8bn in the primary income deficit.
Boost from overseas visitor spending
Spending by overseas visitors, especially from Australia, the US, and the UK, surged to $12.9bn in 2023, playing a key role in reducing New Zealand’s services deficit.
“Most overseas visitor spending was by holiday-makers... This inflow of money from overseas visitors narrowed New Zealand’s services deficit,” said Paul Pascoe (pictured above), Stats NZ’s senior manager.
Changes in goods and services trade
While goods exports declined by $3.5bn, goods imports fell more significantly by $3.9bn. Services exports rose by $9bn, thanks to increases in travel and air transportation, against a $2.9bn rise in services imports.
Widening primary income deficit
The primary income deficit expanded to $12.5bn due to higher earnings by overseas investors in New Zealand compared to New Zealand investors abroad.
Quarterly current account and international investment position
The seasonally adjusted current account deficit widened slightly by $0.2bn to $6.9bn in the December quarter. New Zealand’s net international investment liability position worsened to $209.6bn, or 51.7% of GDP, by the end of December, Stats NZ report.
Here’s where to access the complete Stats NZ report. To compare with the September result, read this article, and for the December 2022 result, click here.
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