Current account returns to deficit as imports rise

The seasonally adjusted current account deficit was $0.4 billion in the September 2020 quarter, compared with last quarter’s record surplus of $0.6 billion, Stats NZ said today.

The main contributor to the deficit was the rise in goods imports of $1.1 billion, following the fall in the June 2020 quarter.

“The rise in goods imports was mainly driven by an increase in car imports,” international statistics senior manager Peter Dolan said.

On an annual basis, New Zealand’s current account deficit for the September 2020 year narrowed to $2.6 billion, compared with a deficit of $11.7 billion in the September 2019 year.

QuarterCurrent account balance
Sep-2018-2846000000
Dec-2018-3099000000
Mar-2019-2955000000
Jun-2019-2757000000
Sep-2019-2856000000
Dec-2019-1969000000
Mar-2020-1389000000
Jun-2020571000000
Sep-2020-438000000

The services balance returned to surplus in the September 2020 quarter. This was due to a $270 million rise in services exports and a $304 million fall in services imports.

“While travel and transportation services trade have fallen since border restrictions were imposed in March, our other top services have remained steady, now making up a larger proportion of the total,” Mr Dolan said.

Exports of travel and transportation services include spending by overseas visitors and students in New Zealand as well as airfares and cargo costs.

QuarterSep-2016Sep-2017Sep-2018Sep-2019Sep-2020
Transportation627000000680000000739000000753000000308000000
Travel26590000002884000000285900000029690000001472000000
Charges for the use of intellectual property175000000231000000294000000293000000335000000
“Telecommunications computer and information services”258000000261000000282000000384000000409000000
Other business services451000000472000000483000000521000000529000000
All other services554000000576000000608000000570000000385000000

Imports of travel and transportation services include money spent overseas by New Zealand visitors and students as well as airfares and cargo costs.

QuarterSep-2016Sep-2017Sep-2018Sep-2019Sep-2020
Transportation985000000107600000012520000001297000000682000000
Travel1703000000184600000020230000001988000000324000000
Insurance and pension services274000000317000000458000000536000000473000000
“Telecommunicationscomputer and information services”369000000383000000464000000580000000582000000
Other business services76500000079800000086200000010760000001027000000
All other services664000000758000000807000000888000000811000000

Travel and transportation services combined contributed 52 percent of total services exports and just over a quarter of services imports in the September 2020 quarter. Other business services (for example, management fees paid by overseas-owned companies) made up 15 percent of total services exports, now the second largest contributor as travel and transportation services declined. On the imports side, other business services (mainly management fees and advertising) made up over a quarter of total services imports, now the top contributor.

In comparison, in the September 2019 quarter, before COVID-19, travel and transportation services combined made up 68 percent of total services exports and just over half of total services imports.

/Stats NZ Public Release. View in full here.