Statistics NZ has reported New Zealand's current account deficit in calendar 2013 fell to NZ$7.5 billion or 3.4% of GDP from NZ$8.9 billion or 4.1% of GDP in the year to the September quarter.
The deficit was slightly above market expectations grouped around an annual deficit of 3.3% and NZ$7.5 billion.
Record dairy exports drove most of the improvement in the goods balance, although this was offset by a rise in the investment income deficit as profits earned by foreign owned firms rose to their highest levels in four years.
The current account deficit was NZ$837 million in the December 2013 quarter, which was down by NZ$1.74 billion from the September 2013 quarter.
"New Zealand exported record levels of dairy products this quarter, which drove the balance on goods and services to its highest-ever surplus," Statistics NZ balance of payments manager Jason Attewell said.
The balance on goods and services was a surplus of NZ$1.818 billion in the December quarter, which was the largest seen in a December quarter since the series began in 1987. Exports of goods rose NZ$1.41 billion in the December quarter, while imports of goods fell NZ$676 million due to lower imports of capital goods in the December quarter than the September quarter, which included military helicopter purchases.
The services surplus of NZ$140 million for the quarter was down NZ$146 million from the previous quarter and was the lowest in 15 years.
"Overseas visitors to New Zealand stayed for longer periods, but spent less while they were here," Statistics NZ said.
"However, total overseas visitor expenditure was still higher than a year ago. New Zealand companies also earned less revenue from providing film production services during the December 2013 quarter," it said.
Income deficit grows
Statistics NZ reported the income deficit rose by NZ$330 million in the quarter to NZ$2.347 billion.
Foreign investors earned NZ$2.347 billion on their New Zealand direct investments in the December 2013 quarter, the highest amount since the December 2009 quarter when NZ$2.654 billion was earned.
Of the profits earned, NZ$1.274 billion was reinvested and NZ$778 million was paid overseas in dividends.
"The level of reinvested earnings in the latest quarter, driven by the bank sector, was the highest since the series began in the June 2000 quarter," Statistics NZ said.
"The quarterly current account deficit was funded by a net inflow of foreign investment during the December 2013 quarter. Overseas investors increased their holdings of debt securities issued by New Zealand's banking sector over this time," Statistics NZ said.
New Zealand's net international liability position fell to NZ$147.6 billion (66.6% of GDP) at 31 December 2013 from NZ$149.5 billion at 30 September 2013.
"Rising overseas share prices increased the value of New Zealand's overseas assets this quarter, while falling domestic share prices decreased the value of our overseas liabilities" Attewell said.
(Updated with more details)
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.