New Zealand’s current account deficit in the year to March was NZ$8.3 billion, or 4.3% of GDP, figures released by Statistics New Zealand show.
Economists surveyed by both Reuters and Bloomberg expected the current account deficit to come in at 4.4% of GDP. The NZ$8.3 billion deficit compared with a NZ$4.5 billion deficit in the year to March 2010, although the March 2010 year deficit would have been NZ$6.1 billion if unusual structured tax transaction payments made by New Zealand's foreign-owned banks to the IRD were not included in the figures.
The deficit widened from NZ$8 billion, or 4.1% of GDP in the year to December 2010. That change was mainly due to a drop in non-resident withholding tax collected in the March quarter due to the Christchurch earthquakes, Stats NZ said.
The blowout in the March 2011 year current account deficit came as Statistics New Zealand changed where it placed the value of reinsurance claims flowing into New Zealand due to the earthquakes that hit Christchurch on September 4 and February 22.
Total outstanding reinsurance claims from the September and February earthquakes were estimated to be NZ$11.1 billion, Stats NZ said. These were moved from the current account (which would have recorded a surplus) to the capital account.
Another factor may also change the current account deficit, with Stats NZ also having to calculate the 4.3% deficit using December 2010 year GDP, rather than March 2011 year GDP due to delays caused by the earthquakes. GDP figures for the March quarter are due on July 7.
Quarterly improvement
The seasonally adjusted current account deficit in the March 2011 quarter was NZ$1.8 billion. This was NZ$1.1 billion smaller than the December 2010 quarter deficit, Stats NZ said.
International debt position improves
Meanwhile, New Zealand’s net international liabilities were NZ$148.2 billion at March 31, down from NZ$158.6 billion at December.
“Much of the fall is due to outstanding reinsurance claims from the 22 February Christchurch earthquake, which are an asset to New Zealand until the claims are paid,” Government Statistician Geoff Bascand said in a release.
“Other features of international investment in the March 2011 quarter included borrowing from overseas by the New Zealand government, and the banking sector reducing its overseas debt,” Bascand said.
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