Annual current account deficit $33.0 billion

The annual current account deficit was $33.0 billion (8.5 percent of gross domestic product (GDP)) in the year ended 31 March 2023, according to figures released by Stats NZ today.

This compared with an annual current account deficit of $34.4 billion (9.0 percent of GDP) in the year ended 31 December 2022.

The annual current account deficit was $24.2 billion (6.8 percent of GDP) in the year ended 31 March 2022.

A current account deficit reflects that we are spending more than we are earning overseas. The size of the current account balance in relation to GDP shows its significance in the context of New Zealand’s overall economy.

In the year ended 31 March 2023, the widening in the annual current account deficit was mainly due to a $6.4 billion widening of the goods deficit and a $2.2 billion widening of the primary income deficit.

The primary income deficit indicates that New Zealand investors earn less overseas than overseas investors earn from New Zealand.

Goods imports drive the current account deficit

In the year ended 31 March 2023, goods imports increased $13.4 billion (18.4 percent) to $86.6 billion, driven by petrol, machinery, and transport equipment.

Meanwhile, goods exports increased $7.0 billion (10.7 percent) to $73.0 billion, driven by dairy products, including milk powder, butter, and cheese.

Services imports and exports increase

In the year ended 31 March 2023, services imports increased $8.4 billion (40.3 percent) to $29.4 billion, and services exports increased $8.0 billion (56.6 percent) to $22.0 billion. This led to a $476 million widening of the services deficit.

“Both imports and exports of travel and transportation services increased in the year ended March 2023, as more people travelled into and out of New Zealand.” institutional sectors senior manager Paul Pascoe said.

Travel services includes the spending by overseas visitors in New Zealand, and the spending of New Zealanders overseas.

Transportation services records the cost of carrying goods and people into and out of New Zealand.

Seasonally adjusted current account deficit narrows in the quarter

The seasonally adjusted current account deficit narrowed to $8.3 billion in the March 2023 quarter, from $9.2 billion in the December 2022 quarter. Both the seasonally adjusted goods and services deficits narrowed in the March 2023 quarter.

Without seasonal adjustment, the actual current account deficit narrowed to $5.2 billion in the March 2023 quarter, from $10.1 billion in the December 2022 quarter. The actual goods deficit narrowed, while the actual services balance changed from a deficit to a surplus in the March 2023 quarter.

Seasonally adjusted series are subject to revision as we better understand how seasonal patterns have evolved since COVID-19 impacts first started. For example, changes to border restrictions lead to movements in the data that are different from the long-term seasonal pattern for travel services.

Capital account

The capital account records insurance claims from exceptional insurance events. The capital account also records sales and purchases of copyright, brand names, and carbon trade credits.

In the March 2023 quarter, the capital account recorded an inflow of $2.3 billion.

“The March 2023 quarter inflow of $2.3 billion is mainly made up of claims by New Zealand insurers on overseas reinsurers, following the larger than usual claims that have arisen from the Auckland flooding and Cyclone Gabrielle,” Pascoe said.

A reinsurer is an insurance company that insures the risks of other insurance companies. Larger than usual reinsurance claims have also occurred during previous exceptional events, including the Kaikōura and Canterbury earthquakes.

Net international liability position

The net international position represents the difference between New Zealand’s financial assets and liabilities with the rest of the world. New Zealand has a net liability position as we have more liabilities with the rest of the world than we do assets.

At 31 March 2023 New Zealand’s net international liability position was $189.1 billion (48.8 percent of GDP), $5.5 billion (2.9 percent) narrower than the position at 31 December 2022. During the March 2023 quarter, New Zealand international assets recorded an increase of $10.9 billion, while New Zealand international financial liabilities recorded an increase of $5.4 billion.