New Zealand’s seasonally adjusted current account deficit was $2.5 billion in the December 2018 quarter, Stats NZ said today.
This is largely unchanged from the September 2018 quarter’s deficit.
Decreased dairy and meat product exports widened the goods deficit to $1.0 billion in the latest quarter – lower dairy prices and smaller meat volumes were the largest contributors.
“However, increased spending by overseas visitors to New Zealand and a smaller income deficit meant the overall current account deficit was almost unchanged this quarter,” international statistics senior manager Peter Dolan said.
International liability position widens
Our net international liability position represents how much the country’s overseas liabilities exceed its overseas assets. New Zealand’s net international liability position was $167.3 billion at 31 December 2018 (57.0 percent of GDP). This was up $10.9 billion from the September 2018 position of $156.3 billion (53.6 percent of GDP).
As a percentage of GDP, the latest quarter’s liability position is the highest since the December 2016 quarter (59.5 percent). However, economic growth over time means that as a percentage of GDP the liability position continues an overall downward trend since the 2008/09 global financial crisis.
The main cause of the rise in net liabilities was changes in the market value of New Zealand’s overseas assets and liabilities – which led to a net $5.9 billion fall in market prices. The downturn in global and New Zealand stock markets during the December 2018 quarter had a greater impact on our assets held abroad (down $8.1 billion) than it did on our liabilities (down $2.3 billion).
The market price change to our assets was mainly reflected in portfolio equity investment.
“Many New Zealanders would have experienced the impact of the change as a fall in the value of their KiwiSaver balances during the quarter. However, this fall goes against the general upward trend of KiwiSaver over the last three years,” Mr Dolan said.
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Net other valuation changes also increased the liability position – by $3.2 billion.
Financial account flows
Financial account transactions also contributed to the wider net international liability position in the December 2018 quarter. This was mainly due to the New Zealand Treasury reducing its reserve assets offshore as it repositioned its assets ahead of forthcoming bond repayments.
|Year ended in quarter||Net international investment position to GDP (%)|