NZ current account deficit $1.8b

Wednesday 22nd June 2011

New Zealand's seasonally adjusted current account balance was a deficit of $1.8 billion in the March quarter, Statistics New Zealand (SNZ) says.

That was $1.1 billion smaller than the December quarter deficit.

Reinsurance claims from overseas arising from the Christchurch earthquake on February 22 were estimated at $7.6 billion, but those claims did not affect the current account.

The smaller current account deficit in the latest quarter was driven by a $1 billion fall in income from foreign investment in New Zealand, SNZ said.

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

Unadjusted, the current account balance was a deficit of $97 million, compared to a surplus of $159 million in the March 2010 quarter.

New Zealand's surplus on trade in goods and services rose $275 million in the March 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 year current account deficit of $8.3 billion was about 4.3% of GDP.

The December year current account deficit had been revised to 4.1% of GDP, following a change in the treatment of estimated reinsurance claims from overseas for the September quarter Canterbury earthquake, which was now also excluded from the current account, SNZ said.

At March 31, New Zealand's net international liabilities were $148.2 billion, compared with $158.6 billion as at December 31.

Much of the fall was due to outstanding reinsurance claims from the February 22 Christchurch earthquake, which were an asset for New Zealand until the claims were paid.

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

Other features of international investment in the March 2011 quarter included borrowing from overseas by the Government, and the banking sector reducing its overseas debt.

NZPA

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