New Zealand’s current account deficit was $30.6 billion, or 7.6% of gross domestic product, in the year ended September, according to Statistics NZ data.
This deficit was $600 million lower than the same time last year, when it was equal to 8.3% of gross domestic product.
Stats NZ said the narrowing of the deficit was due to a $4.1 billion improvement in services balance, but was offset by bigger deficits in goods and primary income.
Jason Attewell, a general manager at Stats NZ, said services exports rose $9.3 billion to $24.9 billion, driven by travel exports which were up $6.7 billion to $11.1 billion.
“More overseas visitors to New Zealand in the year ended September 2023 meant an increase in tourism spending, but levels are still below what they were before COVID-19,” he said.
Goods exports were moving in the opposite direction and decreased 0.1% to $70.9 billion, while imports rose $2.4 billion to $84.1 billion.
The largest contributor to the increase in goods imports were fuel imports—petrol, diesel, and jet fuel—which increased $3.5 billion or 52%.
Meat exports, largely sheep meat and beef, decreased $1.2 billion or 12%, and were partly offset by a $500 million, or 3%, increase in dairy exports.
Overseas investors earned more from their investments in New Zealand than Kiwi investors earned from offshore, widening the primary income deficit $1.4 billion to $12.3 billion
“In the September 2023 year, the rise in interest payments to overseas investors was more than double the rise in interest received from overseas,” Attewell said.
“This reflects the structure of the New Zealand economy where our liabilities to the rest of the world are greater than our assets.”
NZ’s net liability position was $191.9 billion, or 47.9% of GDP, at the end of September, having decreased by $1.7 billion since June.
The total value of assets increased $6.7 billion as the Reserve Bank bought additional foreign currency reserves to potentially use in financial interventions, if needed in the future.
However, a falling share market reduced the value of NZ’s portfolio investments by the same amount, which canceled out any positive effect on the net liability position.
Miles Workman, an economist at ANZ, said New Zealand’s external position was still unsustainable and progress bringing it back into balance stalled in the September quarter.
The deficit as a percentage of GDP was unchanged from the June quarter, at 7.5%.
“Fiscal consolidation and tight monetary conditions should help fix that in time, but until it does New Zealand remains vulnerable to a wide range of possible shocks,” he said in a note.
“All up, New Zealand has a potentially lengthy path towards macroeconomic sustainability to walk, and the Q3 data suggest progress is slow”.
31 Comments
According to Chris Bishop if they don't repeal tobacco then gangs will start setting illegal tobacco plantations across the country and more people will smoke, this is not actually sarc.
Watch the video I posted earlier where he's interviewed when he was a tobacco lobbyist.
There are no options left.
Economic growth has always been physically-underwritten - or the earlier Brownlee resource-grab and the rather pathetic to-come Jones attempt, wouldn't have been needed. The fact that they're down to eyeing off the remnant acreage that is DoC administered, confirms that and tells us there's no 'doubling-time' left.
And the fact that it takes more than a dollar of global debt, to 'make' (interesting word - somewhat inaccurate) a dollar of GDP.
So we're heading rapidly for resource-depleted world, but it's OK because well have numbers in bank 'accounts' which tell us we can still buy..... oh.... they don't tell us anything. Except perhaps that sapient didn't actually describe us.
The largest contributor to the increase in goods imports were fuel imports—petrol, diesel, and jet fuel—which increased $3.5 billion or 52%.
And that will continue to plague us unless we have some kind of national strategy to reduce consumption, e.g.,
Petrol - free public transport and much higher registration charges for SUVs.
Diesel - move far more freight to rail (and do not can the new ferry - as it would be much more efficient in terms of freight)
Jet fuel - downsize Air NZ routes to serve only domestic and short-haul international.
.
You're right that the benefits of importing EVs are debatable, but the costs of importing ICE vehicles are not. It's lose-lose for our trade balance, and lose-lose for our carbon balance. Other than political unpopularity, there is no reason not to set an end date for imports / registrations of ICE vehicles and it feels the appropriate time for that end date is very soon, if not already passed.
Spoke to car dealer the other day he said the same thing that there is going to be a huge problem with the EVs and Hybrids soon. the first thing they do is test the battery and then offer the a trade in at a price that the owner often can not believe. No value in them if Battery is below 75% condition. meanwhile Japan is unloading thousands of used ones us, problem solved for them.
Silly comment of the day.
It's a finite resource.
We're about 1/2 way through it. The best half.
Attempting to grow exponentially.
Try that @ 3% p.a., and it's all over Rover in 24 years.
Oh - and calling people derogatory names, is known as shooting the messenger (usually done because you know they're likely right but you need not to know that,
Just sayin'...
Not a pretty picture and Nicola Willis will no doubt emphasize how badly labour ran the economy when she presents her mini-budget.
In these circumstances and irrespective of the merits of the case, doesn't it seem strange that the new government's first move was to restore tax relief to landlords at a cost of some $2bn and a further $900m by backdating it? I find it baffling, though i would not be so cynical as to suggest that 7 houses Luxon might somewhat biased.
What i find sad about this is that it demonstrates a common mindset-the way to prosper in NZ is through property investment. Given our tax system, that is indeed logical, but doesn't help us prosper as a country.
“In the September 2023 year, the rise in interest payments to overseas investors was more than double the rise in interest received from overseas,” Attewell said.
Thanks to the brilliance of our leaders who have stimulated the price of a s##tbox form $300k to $900k - and we borrow the difference.
Same old assets, but now saddled in debt.
No money is borrowed from overseas to lend on housing as our banks create new money when they lend.
https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creati…
https://www.rbnz.govt.nz/-/media/518b0156a77949d08cfee13723f98974.ashx
https://www.bankofengland.co.uk/working-paper/2018/banks-are-not-interm…
Treadlightly, No money from overseas? I could send you some Terms Sheets that suggest otherwise. A lot of Asian and US money is used in our property market.
You mean houses are sold in international markets using currencies such as CNY? Possibly. But exception to the norm I suspect.
Banks are recovering their reserves and not looking for money to lend. All interbank payments are made by using the NZ Dollar Currency which is held in their exchange settlement accounts and these are lost to overseas banks due to our current account deficits.When banks borrow back deposits they are recovering their reserves and which they need to operate. Do you suppose that the Bank Of England and our Reserve Bank don't understand what they are talking about? We buy and sell our houses using NZ Dollars and not US Dollars or Yuan. Banks never lend out deposits as their lending creates new deposits.
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