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The seasonally adjusted current account deficit was $3,628 million in the September 2007 quarter, $120million larger than the June 2007 quarter deficit, Statistics New Zealand said today.
The increased deficitwas due to a larger deficit on investment income, partly offset by higher inflows of tax received from non-residents.
The goods and services balance was flat this quarter.
The larger investment income deficit was mainly due to an increase in profits earned by foreign-owned NewZealand companies, and higher interest payments made on New Zealand's rising levels of overseas debt.
Partly offsetting these factors was an increase in tax received by the New Zealand government from non-residents on their dividends and interest earned from foreign investment in New Zealand.
The seasonally adjusted balance on goods was flat this quarter, the deficit up $8 million to $791 million.
The value of petroleum and petroleum products exported by New Zealand increased this quarter, as the Tuioilfield commenced production during the quarter.
The value of dairy products exported in the September quarter fell, a rise in world commodity prices not enough to offset the reduction in dairy volumes exported.
The current account deficit for the year ended September 2007 was $14.2 billion (8.3 percent of GDP). Thiscompares with a deficit of $13.7 billion for the year ended June 2007 (8.1 percent of GDP).
The main driverof the increase in the year ended deficit is an increase in income from foreign investment in New Zealand.
The actual current account deficit this quarter of $5,174 million was financed by a net capital inflow of$5,428 million.
Foreign investment into New Zealand over the quarter of $7,894 million exceeded NewZealand investment abroad of $2,466 million.
New Zealand's International Investment Position as at 30 September 2007 was a net liabilityposition of $151.1 billion, 1.6 percent higher than at 30 June 2007.
A net liability position means that NewZealand's financial liabilities to the rest of the world exceed assets.
Debt continues to be the main driver of New Zealand's rising net international financial liabilities.
Net overseas debt of $133.3 billion at 30September 2007, was 11.6 percent higher than one year ago