Net international investment position remains steady

New Zealand’s net international liability position was steady at $180 billion at 30 June 2020, Stats NZ said today.

“Global financial markets saw large changes in valuation, while investment portfolios continued to adjust to the volatility COVID-19 has created,” international statistics senior manager Peter Dolan said.

At 30 June 2020, New Zealand’s net international liability position reached 58.4 percent of gross domestic product (GDP), the highest percentage of GDP since the September 2016 quarter. This compares with 57.1 percent of GDP at 31 March 2020 and a peak of 84.2 percent (March 2009 quarter) during the global financial crisis (GFC).

Net international liability position wider than at end of 2019

When compared with the net international liability position at 31 December 2019, before COVID-19 took hold, the net international liability position is $8.9 billion wider.

“Since the start of 2020, market price changes had the largest impact on the net international liability position. Overall, changes in market prices reduced the value of New Zealand assets abroad by $8 billion, and increased the value of New Zealand liabilities to overseas by $5.6 billion,” Mr Dolan said.

ComponentMarch 2020June 2020
Change in net international investment position-8161000000-721000000
Net valuation changes-160300000004049000000
Net financial account flows7869000000-4771000000

Financial account

The threat of a global pandemic created a flurry of activity in the first half of the year. While there were large reallocations of portfolios from asset types such as equities into cash and deposits in the March 2020 quarter, there were further reallocations returning to a more diversified portfolio in the June 2020 quarter.

Year ended in quarterEquity and investment fund shares (portfolio investment)Currency and deposits (other investment)
Jun-001111725510222950000
Sep-001330125044150508000
Dec-00543075671924679220
Mar-01-100155135-381650900
Jun-011046332710-187718300
Sep-01-365964745-114711000
Dec-011553346980-177995200
Mar-02775189040455656700
Jun-021225227440413837300
Sep-0263759940072788000
Dec-02-331676710-359991200
Mar-03-763610000965320800
Jun-03-203992000-568852500
Sep-03-1017535000-434509000
Dec-0391526000159719230
Mar-041343635960253936870
Jun-04-527252560801052180
Sep-04443970000263216740
Dec-04521510000-1202436400
Mar-05288641000752544400
Jun-05-354350001398936900
Sep-05267388000-770635600
Dec-05982163000-547587300
Mar-06-8917480003744638400
Jun-0622574000-3377996680
Sep-06505925000880265300
Dec-061263338000404969000
Mar-071068769000-81069000
Jun-071305346000-862389200
Sep-07320338000235936200
Dec-0755896200041446000
Mar-08-86232000-316067000
Jun-08-268865000-675085000
Sep-08-1860301000782925000
Dec-08-1627945000-474990000
Mar-09481002000-632111000
Jun-09131906600013872000
Sep-096835710001224781000
Dec-0910575300001836740000
Mar-10-85049000-2186702000
Jun-10160853100032825000
Sep-10221611000822082000
Dec-10833493000-101571000
Mar-11-9504720001043006000
Jun-11211271000-782618000
Sep-11973207000-60196000
Dec-11-899598000-2026518000
Mar-12163209000-492440300
Jun-12278092000878823000
Sep-12-3215400076173000
Dec-12-660077000291627000
Mar-1373306700013704000
Jun-13924590000546385000
Sep-132480209000947770000
Dec-131944381000-23198000
Mar-1425886000270854000
Jun-141461177000-602971000
Sep-14173645000205829000
Dec-142126293000360729000
Mar-15-24612000276362000
Jun-15-5436630002989825000
Sep-15-540547000310828000
Dec-152608807000-968127000
Mar-161034396000-395818000
Jun-161022847000-2226511000
Sep-163630278000804496000
Dec-162727250002990736000
Mar-17730616000-3751607000
Jun-171944630000674079000
Sep-17-7015910002613801000
Dec-179215620001135138000
Mar-181888128000-1071376000
Jun-18174674000-156604000
Sep-18773053000-572889000
Dec-18-632716000738904000
Mar-192296457000585569000
Jun-19472946000458776000
Sep-19-1023657000344156000
Dec-191768730000-309257000
Mar-20-961158200012460538000
Jun-206011735000-9454360000

There was a net divestment of New Zealand investment abroad of $9.4 billion in the June 2020 quarter. While the largest driver of the inflow came from reducing holdings of currency and deposits (other investment), much of this was reinvested in assets like equities and debt securities (portfolio investment).

The $4.5 billion divestment in reserve assets was a by-product of domestic banks reducing their settlement account balances held with the Reserve Bank of New Zealand . The higher levels of these settlement account balances were mainly attributed to RBNZ’s large-scale asset purchase program, which has injected cash into the New Zealand economy.

Net external debt

New Zealand’s net external debt widened $4.3 billion in the quarter to $145.5 billion at 30 June 2020.

New Zealand’s net external debt (borrowings from foreign lenders) is different from its net international liability position as the net external debt records investments in the form of debt instruments and excludes equity (shares) and financial derivatives.

General government net external debt was $18.4 billion at 30 June 2020 compared with $21.4 billion at 30 June 2019.

/Stats NZ Public Release. The material in this public release comes from the originating organization and may be of a point-in-time nature, edited for clarity, style and length. View in full here.