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New Zealand Current Account Deficit NZ$1.797 Billion

New Zealand Current Account Deficit NZ$1.797 Billion

New Zealand posted an unadjusted current account deficit of NZ$1.797 billion in the second quarter of 2012, Statistics New Zealand said on Wednesday.

That missed expectations for a shortfall of NZ$1.620 billion following the upwardly revised deficit of NZ$1.072 billion in the first quarter.

The larger quarterly deficit was due to higher profits earned by foreign-owned banks in New Zealand, the bureau said.

"Overall, when compared with the latest quarter, more profits were paid out as dividends instead of being reinvested in New Zealand," balance of payments manager John Morris said.

The current account/GDP ratio was -4.9 percent, topping forecasts for a 5.2 percent contraction after dipping 4.8 percent in the previous three months.

For the June 2012 year, New Zealand's current account deficit was $10.1 billion, compared to a deficit of $7.4 billion for the June 2011 year.

The larger annual deficit was mainly due to increased imports of goods over the year, the bureau said, as prices for petroleum and petroleum products rose. Foreign-owned banks also made higher profits over the year.

New Zealand's exports of services increased more than imports of services from a year earlier. Exports of personal, cultural, and recreational services were up $213 million over this time, mainly due to film production services.

"The Hobbit began filming in New Zealand in 2011, which provided a boost to exports of film production services," Morris said.

New Zealand's quarterly current account deficit was funded by a net inflow of foreign investment in the financial account. Foreign investors continued to purchase New Zealand Government bonds, and banks received deposits from overseas in the latest quarter.

The net inflow of foreign investment was the main reason for the increase in New Zealand's net international liability position, which was $148.6 billion (72.6 percent of GDP) in Q2, up from $145.6 billion (71.9 percent of GDP) in the first quarter.

Seasonally adjusted, the current account deficit was NZ$2.9 billion - up from NZ$2.6 billion three months prior.

Upon the release of the data, the New Zealand dollar ticked up against major currencies, trading near 1.2634 against the Australian dollar, 1.5774 versus the euro, 0.8274 against the U.S. dollar and 65.20 versus the yen.

by RTT Staff Writer

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