Tourism drop-off hits balance of payments

By Phil Boeyen, ShareChat Business News Editor

Thursday 28th March 2002

The fall in tourist numbers to New Zealand in the aftermath of September 11 has shown up in the country's latest quarterly current account deficit.

Statistics New Zealand says the deficit for the three months ended December was $1.842 billion. Although the figure was $28 million smaller than the previous year it was $782 million higher than the September 2001 deficit on a seasonally adjusted basis.

"This is the second consecutive quarterly increase in the size of the seasonally adjusted current account deficit," Statistics NZ says.

The main contributor to the increase was a $622 million drop in the goods and services surplus.

"Falling exports of goods and services across the board was the main cause. Lower prices for New Zealand's goods exports, and falling volumes of exported goods both contributed to a $326 million fall in the value of goods exports.

"A $193 million fall in services exports was primarily due to a fall in the number of overseas visitors in the December 2001 quarter compared with the December 2000 quarter."

The figures show that increased returns to overseas investors from their investments in New Zealand were also a factor in the current account deficit increase.

"These returns rose by $219 million in the December 2001 quarter to $2.364 billion, primarily from profits of foreign-owned New Zealand enterprises.

"This increase was partly offset by higher earnings of New Zealand residents from their investments overseas, which increased by $94 million: the third consecutive quarterly increase. Improved returns from subsidiaries in Australia were a significant factor in this increase."

The current account deficit for the year ended December was $3.8 billion, equivalent to 3.2% of GDP. This was an improvement on the previous year's deficit of $6.142 billion, which was 5.6%of GDP.

Finance Minister Michael Cullen says the annual current account deficit for the year was strongest result recorded since March 1992.

"The quarterly figure was a little below but still broadly in line with market expectations."

Dr Cullen says the recent bounce back in tourism numbers should take some pressure off the BoP moving forwards although the deficit is expected to increase somewhat as lower export prices, particularly in the dairy sector, impacted on export receipts and as a strong domestic economy pushed up the demand for imports.

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