Current account deficit rises to 8.9 percent of GDP

The current account deficit for the year ended December 2008 was $16.1 billion (8.9 percent of GDP),
Statistics New Zealand said today. This compares with a deficit of $15.5 billion (8.6 percent of GDP) for the
year ended September 2008, and a deficit of $14.4 billion (8.2 percent of GDP) for the year ended
December 2007.
The main reasons for the increase in the deficit between the year ended September 2008 and the year
ended December 2008 were a rise in the value of imports of transportation services and a fall in the value of
exports of travel services. The increased imports of transportation services was mainly due to higher freight
costs, while the decrease in exports of travel services was caused by fewer visitors coming to New Zealand.
Exports of goods increased, with higher values of dairy products behind the rise. This was offset by an
increase in goods imports, which was due to an increase in the prices of imports of petroleum and
petroleum products.
The seasonally adjusted current account deficit for the December 2008 quarter was $3,772 million, $236
million smaller than the deficit in the September 2008 quarter. The smaller deficit in the latest quarter was
due to an increase in the value of exports of goods, which was partly offset by increased value of imports of
services. Exports of goods increased due to higher exports of dairy and forestry products.
The December 2008 quarter investment income deficit of $3,199 million is $58 million smaller than the
September 2008 quarter deficit. This is the second consecutive fall in the quarterly investment income
deficit. In the December 2008 quarter, foreign investors' earnings in New Zealand were $160 million lower
than in September 2008, and New Zealand investors' earnings from abroad were down $102 million.
New Zealand's current account deficit has the effect of increasing its net overseas liabilities, as external
funding is required to finance the deficit. At 31 December 2008, New Zealand's overseas liabilities
exceeded its overseas assets by $167.7 billion (92.9 percent of GDP). This compares with net overseas
liabilities of $152.6 billion (87.1 percent of GDP) at 31 December 2007.