Annual current account deficit widens to $29.7 billion

The annual current account deficit was $29.7 billion (7.9 percent of gross domestic product (GDP)) in the year ended 30 September 2022, $13.3 billion wider than in the year ended 30 September 2021, Stats NZ said today.

The largest annual current account deficit prior to the COVID pandemic was $14.7 billion in the December 2008 year during the global financial crisis (7.8 percent of GDP).

"A current account deficit reflects that we are spending more than we are 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," institutional sectors senior manager Paul Pascoe said.

The widening in the annual current account deficit was mainly due to a $10.2 billion widening in the goods and services deficit.

Annual goods and services imports outpace exports

Total imports of goods and services for the year ended 30 September 2022 were $104.6 billion, an increase of $21.5 billion from the year ended 30 September 2021.

This rise in goods imports was mainly driven by petrol, diesel and aviation gas, and machinery equipment.

Transportation services imports also contributed to the rise, up $3.2 billion (or 82 percent) from the previous year.

"Rising prices for some imported commodities like petrol, a falling exchange rate, and higher shipping costs all contributed to the annual increase in imports," Pascoe said.

Total exports of goods and services in the year ended 30 September 2022 were $86.5 billion, an $11.3 billion (or 15 percent) increase from the year ended 30 September 2021.

"Dairy and meat were the key drivers for the increase in goods exports, with dairy prices continuing to rise in the year ended 30 September 2022," Pascoe said.

International trade: September 2022 quarter has more details about the increases.

Seasonally adjusted current account deficit continues to narrow in the quarter

The seasonally adjusted current account deficit narrowed by $1.3 billion to $5.9 billion in the September 2022 quarter, from $7.3 billion in the June 2022 quarter.

Without seasonal adjustment, the actual current account deficit widened to $10.2 billion in the September 2022 quarter, from $5.4 billion in the June 2022 quarter.

Seasonally adjusted series are subject to revision 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.

Financial account records a net inflow

The financial account shows the flows of investment into, and out of, New Zealand. In the September 2022 quarter, the financial account recorded a net inflow of $5.2 billion. This inflow helped to partly finance the current account deficit.

Overseas investors invested a net $924 million into the New Zealand economy, while New Zealand residents reduced investment in overseas financial assets by a net $4.3 billion.

Net international liability position widens

The net international investment 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 as we have more liabilities with the rest of the world than we do assets.

New Zealand's net international liability position was $193.7 billion (51.9 percent of GDP) at 30 September 2022, $11.0 billion (or 6.0 percent) wider than at 30 June 2022.