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Economy in Brief

New Zealand Current Account Deteriorates in Q2
by Carol Stone September 23, 2004

Today, Statistics New Zealand published that nation's second quarter current account. As with South Africa yesterday, there was notable deterioration. In New Zealand, though, both trade and income balances contributed to the larger deficit. At NZ$2,074 million, the current account had only the third deficit larger than NZ$2.0 billion in the 17-year history of this balance of payments compilation.

The balance on goods and services trade, often in sizable surplus, shrank to nearly zero in Q2. A surge in goods imports of 11.5% was the main force, illustrated in the first graph; the country's separate trade data indicate that, as in many other countries, "mineral fuels" imports were up sharply. At the same time, exports of goods were far from weak, with a gain of 7.3% (quarterly percent changes), extending their recovery for a third quarter.

Another major factor in New Zealand's current account is the balance on income and transfers. This deficit of $2.1 billion in Q2 is the largest ever. Foreign investment is important in New Zealand, and its expansion last year is now leading to more outflows of investment income this year, as seen in the second graph.

Seasonally Adjusted, Million NZ$ Q2 2004 Q1 2004 Q4 2003 2003 2002 2001
Current Account Balance -2074 -1520 -1225 -5624 -3949 -2962
Balance on Goods & Services +30 +267 +161 +842 +2168 +3716
Exports of Goods -- %Chg 7.3% 5.8% 2.9% -7.6% -5.4% 11.1%
Imports of Goods -- %Chg 11.5% 3.0% 0.7% -1.9% 1.8% 4.7%
Balance on Income & Current Transfers -2104 -1786 -1386 -6466 -6117 -6677
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