NZ Sept quarter account account deficit $1.8bn

Wednesday 22nd December 2010

Reinsurance claims from the Canterbury earthquakes helped keep a lid on New Zealand's current account deficit in the September quarter.

Statistics New Zealand (SNZ) today put the current account deficit for the quarter at $1.8 billion, and the annual deficit for the September year at $5.9 billion or 3.1% of GDP.

The seasonally adjusted current account balance for the September year was a surplus of $35 million, but without an estimated $1.7 billion in reinsurance claims would have been a deficit of $1.7 billion.

The $1.7 billion figure was an early estimate of the amount New Zealand insurers expected to claim from their overseas insurers, SNZ said.

Excluding the reinsurance claims, the main driver of the current balance in the September quarter was a $581 million smaller investment income deficit.

The $1.8 billion actual deficit for the September quarter was up from a $1.5 billion deficit a year earlier, but was lower than the $2.3 billion deficit median forecast in a Reuters poll of economists. The $5.9 billion annual deficit was similar to the figure for the September 2009 year, but lower than $6.5 billion median forecast.

SNZ said several effects had kept the annual current account deficit relatively stable.

Those included a $1.2 billion goods surplus, due to imports of goods falling more than exports of goods, while the income deficit increased by $2.5 billion as foreign investors earned more income from investments in this country.

The Canterbury earthquakes' reinsurance claims were another factor, as was a $1.2 billion increase in the transfers surplus, and banking sector income tax settlements in the June to December 2009 quarters.

Exports of goods and services had fallen in the latest quarter, mainly due to lower volumes of meat exports, while spending by visitors to this country fell to the lowest level since the March 2002 quarter.

The key feature of foreign investment in New Zealand during the quarter was foreign investors buying a net $3.1 billion of New Zealand government debt securities, SNZ said.

There was also a $2.6 billion outflow of New Zealand investment overseas, which included the estimated $1.7 billion of accounts receivable arising from the Canterbury earthquakes.

As at September 30, New Zealand's net international liabilities were $162.5 billion or 85.2% of GDP, down from the $163.1 billion or 86.3% of GDP at June 30.

NZPA

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