The deficit between what we earn overseas and what we spend as a country has shrunk a lot - and by even more than economists were expecting.
Statistics NZ reports that in the 12 months to June 2025 our current account deficit was $16.0 billion (3.7% of gross domestic product (GDP).
This new figure - which is a four-year low - compares with a revised (down) $18.3 billion deficit in the year ended 31 March 2025 (4.2% of GDP).
The new figures were expected to be lower following a series of revisions by Stats NZ, which had included big cuts to the estimated costs spent by Kiwis on ordering goods from overseas. These costs had been over-estimated previously and it had a big impact.
Notwithstanding all this, the 3.7% latest figure is lower than economists thought it would be and is good news.
The global rating agencies that assign sovereign credit ratings to this country take a dim view of high current account deficit figures. And they have expressed concern in the past about the level of our deficits. So, these latest figures will provide cheer for them - and take the pressure off our credit ratings.
Westpac senior economist Darren Gibbs said the credit ratings agencies "should welcome" news that the deficit is now less than half as wide as the peak seen in 2022, "and not much wider than it was leading into the pandemic".
In terms of some of the detail in the latest figures, Stats NZ said the June 2025 deficit narrowed by $702 million to $3.4 billion. Now, that's the smallest deficit since a $3.1 billion deficit in the June 2021 quarter, according to Stats NZ's international accounts spokesperson Viki Ward.
"The smaller current account deficit was due to a $1.0 billion narrowing of the primary income deficit. This was mainly due to New Zealand investors earning more from their investments abroad," Ward said.
The services balance widened by $124 million in the June 2025 quarter, while the goods balance was similar to the March 2025 quarter deficit.
In the June 2025 quarter, the primary income deficit narrowed by $1.0 billion to $2.3 billion. This is the smallest it has been since $2.2 billion was recorded in the September 2021 quarter.
“New Zealand’s overseas invested pensions earned more income this quarter,” Ward said.
“The overseas subsidiaries of New Zealand companies also recorded a growth in earnings this quarter.”
The seasonally adjusted goods deficit widened to $128 million in the June 2025 quarter, following a deficit of $126 million in the March 2025 quarter.
Goods exports decreased $896 million in the June 2025 quarter to $19.8 billion, led by falls in dairy, fruit, and meat. Goods imports decreased $895 million to $19.9 billion, led by falls in fuel and mechanical machinery and equipment.
In the June 2025 quarter, the seasonally adjusted services balance was a deficit of $690 million, compared with a deficit of $566 million in the March 2025 quarter.
Services exports decreased by $12 million to $8.0 billion, while services imports increased by $112 million to $8.7 billion.
At 30 June 2025, New Zealand’s net international investment liability position was $203.9 billion, compared with $211.2 billion at 31 March 2025.
In the June 2025 quarter, the value of New Zealand’s international assets increased by $18.3 billion to $452.8 billion. Meanwhile, New Zealand's liabilities to the rest of the world also increased by $11.0 billion to $656.7 billion.
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.