NZ current account deficit NZ$921m in June qtr, compared to NZ$90m surplus in March; Worse than economist expectations of NZ$670-690m deficit

NZ current account deficit NZ$921m in June qtr, compared to NZ$90m surplus in March; Worse than economist expectations of NZ$670-690m deficit

By Alex Tarrant

New Zealand recorded an unadjusted current account deficit of NZ$921 million in the June quarter, which was worse than economist expectations, figures released by Statistics New Zealand show.

Economists surveyed by Bloomberg had expected an unadjusted deficit of NZ$671 million, while a Reuters poll gave an expectation of a NZ$690 million deficit. The June quarter deficit compared to a revised NZ$90 million current account surplus in the March quarter (revised from a NZ$97 million deficit).

A NZ$2.4 billion surplus in traded goods (exports minus imports) was cancelled out during the quarter by a NZ$2.5 billion net outflow of investment income, a NZ$630 million net outflow of services income, and a net NZ$163 million net outflow of current transfers, giving the NZ$921 million deficit.

In the year to the June 2011 quarter, New Zealand recorded a current account deficit of NZ$7.474 billion, or 3.7% of GDP, compared to a deficit of NZ$7.196 billion (3.6% of GDP) in the year to March 31, and a deficit of NZ$4.697 billion (2.5% of GDP) in the year to June 30, 2010.

The figures come a day ahead of Gross Domestic Product figures for the June quarter, which economists expect to show economic activity expanded 0.5% in the quarter, building on the March quarter’s 0.8% expansion.

Owe more to the world

Meanwhile at June 30, 2011, New Zealand’s international liabilities exceeded its assets by NZ$140.2 billion, or 70% of GDP, Stats NZ said. This compared to revised net international liabilities of NZ$136 billion, or 68.7% of GDP in the March quarter (revised from NZ$148.2 billion, or 75.1% of GDP).

New Zealand’s international assets included NZ$12 billion of outstanding reinsurance claims from non-residents (overseas reinsurers) for the Canterbury earthquakes. The estimate included NZ$0.7 billion of claims for the 13 June earthquake, minus NZ$0.5 billion of claims from previous earthquakes, which were settled in the June quarter, Stats NZ said.

Work carried out by Statistics New Zealand released this week saw New Zealand’s net international investment position revised for the better after Stats NZ took into account new data into its official series.

Kiwis go on holiday, fewer visitors come here

The NZ$630 million services deficit in the June 2011 quarter was down from a NZ$768 million surplus in the March quarter, and compared to a NZ$268 million deficit in the June 2010 quarter. This came as fewer overseas visitors came to New Zealand during the quarter, and as New Zealanders spent more on overseas trips, Stats NZ said.

Seasonally adjusted deficit widens

Seasonally adjusted figures released by Stats NZ showed a current account deficit of NZ$2.041 billion in the June quarter, compared to a deficit of NZ$1.534 billion in the March quarter.

The larger seasonally adjusted deficit came mainly from foreign investors’ earnings from their investments in New Zealand rising NZ$700 million as foreign-owned insurance companies began to recover from losses in the March quarter, Stats NZ said.

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so NZ continues living way beyond its means - after election the PM is going to have to tell us the REAL situation, incl Chch cant be rebuilt for the forseeable future- still shaking like a rattle as at this morning.

It'll be either JK telling us the REAL situation.. or Goff telling us that we need to go into deficit even more to fund his land development , insurance empire dream,  (and god knows what else in the pipe line). 

We are doomed ..  Start drinking olive oil boys and girls  - we are turning greeks!

Seasonally adjusted figures released by Stats NZ showed a current account deficit of NZ$2.041 billion in the June quarter, compared to a deficit of NZ$1.534 billion in the March quarter.

A disastrous result. And the best spin they can put on it is to lead with the unadjusted numbers.

Bill, where is that update on our track to surplus?

Hi Colin, to be fair to Stats, I'm the one leading with the unadjusted numbers because that's what the economists look at, and we can see whether it's better or worse than expected - is what the wire agencies do too.

Stats' own release went with the seasonally adjusted stuff.

English is currently in New York getting a good dose of global pessamism and doom and gloom (above and beyond what he gets from reading the Top 10s every day). 



I look forward to Bill's response - once he is back - to your question on our track to suplus.

Do you think it may have crossed his mind that it is the political elite that are largely responsible  for causing the doom and gloom, and which will to continue deteriorating the longer they remain in denial?

You see, all change involves loss at some level. So the "Five stages" model has been very usefully used to understand people's reactions to change for many decades.

The five stages of grief Kubler-Ross wrote about are:

  1. Denial
  2. Anger
  3. Bargaining
  4. Depression
  5. Acceptance

When Kubler-Ross wrote about these stages she was very careful to explain that these are normal reactions we have to tragic news. In fact she called them defense mechanisms or coping mechanisms. And this is exactly what they are when we apply the model to coping with change.



  • Denial
  • Anger
  • Bargaining
  • Depression
  • Acceptance
  • Riot/War/Famine

goNZ, 4 small quakes in 10 minutes for the light sleepers in the southwest this morning, although I didn't feel a thing.

Anyway it's absolute rubbish that you have to wait until the shaking stops.  Properly built earthquake resistant buildings should have been started months ago. 

We should be building reparable, insurable buildings.  No excuses.

If this is the balls up for one modest period of earthquakes, imagine the chaos caused by a major quake M8+ near Wellington or a volcano in Auckland.

Best to book your plane ticket now!

We'll wait and see on tomorrow's GDP.

I still can't see how the numbers remain so positive.

If we just consider the physical buildings destroyed which had previously generated income (hotels, offices, homes (incl owner occuppied homes equivalent rent) etc) then we are looking at perhaps $1.5billion PA lost, or 0.75% of GDP.  Most of that was insured for no more than 12 months, so that is lost income to the country.

Then consider capital formation.  We've lost $15b of buildings and infrastructure (at current market value, full replacement is probably double that).  So in a country where total commercial and residential property is worth maybe $600-800b (approx) with total building value say $400-500b.  We've lost perhaps 4% of total asset value, much of which won't be rebuilt and some won't be covered by insurance, so 1-2% of total of the total building stock is lost for now (no intention to rebuild), that's equivalent to 2-4% of GDP.

For numbers to remain largely positive, demonstrates that these figures contain a lot of fudge.

$1bln roughly = 0.5% of GDP so the growth should be there, but it all came from borrowings.  Another reason GDP is such a crappy measure.

What if people in NZ find out about this?

No one I meet admits to reading the business pages.  is a good news source but doesn't seem to have 300,000 readers- though they ought to.


Not quite 300,000. But we have around 200,000 a month come to our site. Not everyone comes every day, but you might be surprised how many come.

We are generating more page impressions or traffic than and I'd like to think we punch a bit above our weight (although I'm a bit lighter than I used to be ;) )



another shocker on our Oz exports from Stats NZ -

The net outflow of migrants from New Zealand to Australia was 2,700 in August 2011, the highest recorded for an August month since 2008 (2,900).

In the year ended August 2011, New Zealand had a net migration gain of 2,300, down from 14,500 the previous year. The latest figure is below the average annual net migration gain of 12,000 over the last 20 years and is the lowest net gain since the October 2001 year (1,700). The decrease in net migration, compared with 2010, was mainly due to an increase in departures to Australia. 

It's not like we really need more immigration though.  It could be argued that we had too much during the last decade.  If we don't have jobs for the existing population, there's not much point in adding to it.

Looking at the Reserve Bank graphs, found here:

It seems that in bad times we have a grunty current account deficit.  In good times we have a horrific current account deficit.  We have a choice between bad and badder.

This has been going on for generations.  I think from memory the last year NZ failed to make a loss was 1973 - a third of a century ago. 

Eventually it must lead to some Greek-style meltdown.  Our politicians fail to recognise or respond to this.  To a degree they are probably just reflecting the short-termist conservative "don't muck around with my pavlova paradise" mindset of the average Kiwi. 

Cheers to all

The NBR spin is rather more positive on this data release:

And spin it is.

 "a NZ$2.5 billion net outflow of investment income"....gollygosh...what could have caused so many to extract to much in such a short space of time...don't tell me it's the perpetual planned sneaky govt supported debasement of the currency....tell Bill English....not that he gives a shite!

What's the other term we use...oh yeah that's right...INFLATION...nah we don't have any of that here....Alan Bollard said so.

How's the credit economy going today...still on the edge of the chasm of doom is it...building sector sick as a advertising pushing the cheaper mortgages...Goofy promising his fools can be better fools having learned they were all fools for 9 wasted bloody years...

And the mob across the ditch...still preaching the "house prices always rise" bullshit?

I dont understand why , when our macro-economic fundamentals are deteriorating , the NZ$ remains so stubbornly high .

If it keeps going up like this, the longer and further  it has to go when it comes down the other side 

The " default function " has kicked in :

....  NZ's maco-economic fundaments are less worse than our trading partners  whose " mac-eco-funds " are more worse , .. .. and some are even more worser than that .

Hence the Kiwi dollar is stubbornly high .

... it is not because we are clever , .. heh heh  ... if anyone was thinking that !

There's a lot of reinsurance money coming in and unlike the Americans or Europeans or Brits or Japanese or Chinese, our central bank hasn't chose to print its way to freedom...

That means our interest rates are higher and people still believe in our currency, hence it gets pushed up.

Completely nuts. And no one in power seems to care what this is doing to our non-commodity exporters.



So you are suggesting RBNZ should print more money...  Brilliant, that's just as nutty as not printing!  Our NZD will plummet and inflation will hit the roof.. Our interest rate might go higher due to lack of funding!  

so let me get this right -  despite poor fundamentals, our dollar is high and continues to be so becuase others are worse and are printing like no tomorrow which lowers their currency - and makes them more competative inthe export market.

So if we printed 10 billion dollars - we could pay off most of our debt / reduce our borrowings for nothing -  our currency wolud fall and therefore be a better stimulant to export led recovery and we would have more cash around to stimulate the investment in jobs that we need - all without more debt milstones around our neck

The downside would be currency weakening causing a bit of inflation - but many argue that increased rates would not be a bad thing especially for savers.

perhaps someone can explain why this would be such a bad thing ... or maybe thats the plan as soon as the election is over and dearer fuel, mortgage rates and goods is no longer important