New Zealand’s current account deficit shrank NZ$800 million in the 2010 year from 2009 due to reinsurance inflows for the September 4 Canterbury earthquake, Statistics New Zealand said today.
Figures also show New Zealand’s net international liabilities – the difference between what it owes the rest of the world and vice versa – shrunk to 81.7% of GDP, from 83.8% of GDP in September.
The current account deficit was NZ$4.4 billion, or 2.3% of GDP, in the 2010 year, down from a deficit of NZ$5.2 billion, or 2.8% of GDP the previous year, figures released by Statistics New Zealand show.
The annual deficit was in line with economist expectations of a deficit of 2.4% of GDP.
Without the reinsurance claims from the first Canterbury earthquake, the current account deficit would have been 4.1% of GDP for the year, Stats NZ said.
In the December quarter, New Zealand’s current account balance moved back into deficit as expected after a surplus was recorded in the September quarter due to inflows of reinsurance payments for the September 4 Canterbury earthquake, Stats NZ said.
Banks issue less short-term debt
The seasonally adjusted deficit was NZ$2.8 billion in the December quarter, down from a surplus of NZ$1.7 billion in the September quarter.
“A feature of these investment inflows [the NZ$2.8 billion net inflow of investments] was that banks issued less overseas short-term debt as their domestic deposits increased, while foreign investors continued to buy New Zealand government bonds,” Government Statistician Geoff Bascand said in a media release.
Banks’ domestic lending was also subdued over the quarter, Stats NZ said.
Net foreign debt falling
New Zealand owed the rest of the world a net NZ$159 billion at December 31, constituting 81.7% of GDP. This was down from 83.8% of GDP at September 30 and 86.5% of GDP at December 31, 2009, Stats NZ said.
New Zealand’s net international debtor position peaked at 90.2% of GDP at March 31, 2009, and has been declining since then, Stats NZ said.
“Outstanding overseas reinsurance claims, which have not yet been paid, are treated as an asset in New Zealand’s accounts. Excluding these claims, the net debtor position would be 83.5% of GDP at 31 December 2010, compared with 85.7% of GDP at 30 September 2010,” Stats NZ said.
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6 Comments
So: Just like a cheque account showing a less overdrawn balance, after making an insurance claim on a wrecked car that is yet to be replaced, we're better off?! We still have a car to replace, and then we are back where we started...as long as the payout equals the price of the new car, of course! And do we even buy a new car? Or just replace it with a 'suitable alternative' and use the difference for something else....
What happens to this debt if our GDP shrinks significantly? Or interest rates rise on this debt, or the dollar drops. What about all three at the same time?
Seems an awefully precarious position to be in give massive uncertainly in the worlds finances.
Where is PDK today for a comment on the merits of GDP as a measurement of economic growth?
Amen to that Boatman.........................still desperate times call for desperate bookeepers to be clutching on to passing intangibles as if they were the smoke escaping the Genie bottle with all wishes used up.
oh Bolly...! now your in trouble boyo...!wretched just wretched.
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