Current account deficit falls

New Zealand’s seasonally adjusted current account balance was a deficit of $1.8 billion in the March 2011 quarter, Statistics New Zealand said today. This was $1.1 billion smaller than the December 2010 quarter deficit. Reinsurance claims from overseas arising from the Christchurch earthquake on 22 February were estimated at $7.6 billion, but these claims do not affect the current account.

The smaller current account deficit this quarter was driven by a $1.0 billion fall in income from foreign investment in New Zealand.

"Company profits fell as foreign-owned insurance companies reported losses from the Canterbury earthquakes," balance of payments manager John Morris said.

New Zealand's surplus on trade in goods and services rose $275 million in the March 2011 quarter, mainly due to higher export prices. Increases in dairy products drove exports of goods higher, while crude oil and forestry exports also increased.

The March 2011 year current account deficit of $8.3 billion is approximately 4.3 percent of GDP. This ratio uses expenditure on GDP for the December 2010 year and will be updated when Gross Domestic Product: March 2011 quarter is published on 7 July 2011.

The December 2010 year current account deficit has been revised to 4.1 percent of GDP. This revision follows a change in the treatment of estimated reinsurance claims from overseas for the September 2010 quarter Canterbury earthquake, which is now also excluded from the current account.

International investment

At 31 March 2011 New Zealand’s net international liabilities were $148.2 billion, compared with $158.6 billion at 31 December 2010. Much of the fall is due to outstanding reinsurance claims from the 22 February Christchurch earthquake, which are an asset for New Zealand until the claims are paid.

"Total outstanding reinsurance claims on non residents from the September and February earthquakes combined are estimated at $11.1 billion," Mr Morris said.

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.

For more information, please see the Balance of Payments and International Investment Position: March 2011 quarter information release. For related data, please visit Infoshare.
Geoff Bascand 22 June 2011
Government Statistician