Annual current account deficit $29.8 billion

The annual current account deficit was $29.8 billion (7.5 percent of gross domestic product (GDP)) in the year ended 30 June 2023, according to figures released by Stats NZ today.

The deficit was $1.2 billion wider than the year ended 30 June 2022 (7.9 percent of GDP).

A current account deficit reflects that New Zealand is spending more than it is earning overseas. The size of the current account balance in relation to GDP shows its significance in the context of New Zealand's overall economy.

The widening annual current account deficit in the year ended 30 June 2023 was due to a $2.9 billion widening of the goods deficit and a $1.3 billion widening of the primary income deficit. This was partly offset by a $2.4 billion narrowing of the services deficit.

Annual goods imports grow faster than exports

In the year ended 30 June 2023, goods imports increased $8.4 billion to $85.8 billion, driven by fuel, motor vehicles, and aircraft.

"Fuel, including diesel, petrol, and jet fuel, was the main contributor to the increase in goods imports, driven by increases in both the price and volume of fuel," institutional sectors senior manager Paul Pascoe said.

In the year ended 30 June 2023, goods exports increased $5.5 billion to $73.3 billion, driven by dairy products, including milk powder, butter, and cheese.

Annual services exports grow faster than imports

In the year ended 30 June 2023, annual services exports grew $9.8 billion to $23.8 billion, while services imports grew $7.4 billion to $29.9 billion. This led to a services deficit of $6.1 billion, $2.4 billion narrower than the year ended 30 June 2022.

In the year ended 30 June 2023, travel services exports increased $6.7 billion to $10.3 billion, while travel imports increased $3.5 billion to $5.7 billion.

"The spending by overseas visitors in New Zealand is called travel exports, while the spending by New Zealanders overseas is called travel imports. In the June 2023 year, overseas visitors increased their spending almost twice as much as New Zealanders increased their spending overseas," Pascoe said.

International travel: June 2023 shows that more people have been travelling into and out of New Zealand since the New Zealand borders reopened.

Primary income deficit widens

In the year ended 30 June 2023, the primary income deficit widened by $1.3 billion to $11.6 billion. The primary income deficit shows that New Zealand investors earned less from overseas than overseas investors earned from New Zealand.

Income earned by overseas investors increased $3.2 billion in the year ended 30 June 2023, while income earned by New Zealand investors from overseas increased $2.0 billion.

"The recent increases in interest rates have contributed towards larger interest payments to foreign investors on their loans, deposits, and bonds held in New Zealand. There was also an increase in holdings of New Zealand issued bonds by foreign investors in the June 2023 year," Pascoe said.

Quarterly seasonally adjusted current account deficit narrows

In the June 2023 quarter, the seasonally adjusted current account deficit narrowed $1.0 billion to $6.7 billion, from $7.7 billion in the March 2023 quarter. The narrowing deficit was driven by the seasonally adjusted goods and services deficit narrowing $1.9 billion in the June 2023 quarter.

Without seasonal adjustment, the actual current account deficit narrowed to $4.2 billion in the June 2023 quarter, from $4.7 billion in the March 2023 quarter. The goods balance changed to a surplus of $442 million, from a deficit of $2.7 billion in the March 2023 quarter, driven by increases in kiwifruit and dairy products exports.

The services balance, on the other hand, changed to a deficit of $1.5 billion, from a surplus of $289 billion in the March 2023 quarter, driven by decreases in travel services exports.

Seasonally adjusted series are subject to data updates as we better understand how seasonal patterns have evolved since COVID-19 impacts first started. For example, changes to border restrictions lead to movements in the data that are different from the long-term seasonal pattern for travel services.

Net international liability position

The net international position represents the difference between New Zealand's financial assets and liabilities with the rest of the world. New Zealand has a net liability position, due to having more liabilities than assets with the rest of the world.

At 30 June 2023, New Zealand's net international liability position was $189.3 billion (47.8 percent of GDP), almost the same position at 31 March 2023 at $189.2 billion (48.7 percent of GDP). In the June 2023 quarter, the net financial account transactions were largely offset by valuation changes and other changes.