New Zealand's seasonally adjusted current account deficit was $2.0 billion in the December 2011 quarter, Statistics New Zealand said today. This was $0.8 billion smaller than the September 2011 quarter deficit.
The smaller deficit was mainly due to a higher goods surplus, with exports of dairy products the main contributor to a $0.6 billion increase in goods exports.
"Exports of dairy products reached record-high levels this quarter," balance of payments manager John Morris said.
A fall in New Zealand's investment income deficit with the rest of the world also contributed to the fall in the current account deficit. Overseas portfolio investors received lower dividend payments from shares held in New Zealand companies. Profits earned by foreign-owned companies in New Zealand also fell.
Spending by overseas visitors to New Zealand increased $0.1 billion, to $1.8 billion in the latest quarter. This includes spending by visitors who were here for the Rugby World Cup.
For the year ended December 2011, New Zealand's current account deficit was $8.3 billion (4.0 percent of GDP), compared with a deficit of $8.8 billion (4.3 percent of GDP) for the year ended September 2011.
New Zealand's persistent current account deficits have led to a build-up of net international liabilities, mainly in the form of debt as we borrow from overseas to fund these deficits. At 31 December 2011, New Zealand's international liabilities exceeded its assets by $147.0 billion (71.9 percent of GDP), compared with $146.2 billion at 30 September 2011.
The official sector (general government and the Reserve Bank) was in a net international debtor position at 31 December 2011, for the first time in six years.
The official sector's move to a net debtor position this quarter was partly because the Reserve Bank and Treasury decreased their holdings of overseas reserve assets. Some of these assets were used to pay overseas holders of government bonds that matured this quarter, which decreased New Zealand's liabilities to overseas investors.
Overall, New Zealand investors reduced their investments abroad in the latest quarter, and foreign investors withdrew their investments from New Zealand. It is three years since there were significant divestments of New Zealand's overseas assets and liabilities in the same quarter.