Current account deficit increases

23:35, Sep 18 2012

New Zealand's current account deficit has widened to $10.1 billion or 4.9 per cent of gross domestic product, driven by a rise in the price of petrol.

Statistics New Zealand said this morning that the current account deficit was $2.9b in the three months to June 30, an increase of $300 million over the previous quarter, with the recent increase driven by higher profits made by the foreign-owned banks.

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

The annual deficit of $10.1b was $2.7b higher than the previous year.

Most of the increase was blamed on higher imports, with the price of petrol climbing. The increase in petrol was partly offset by exports of cultural and recreational services, up by $213m, boosted by filming of the Hobbit.

Because the ultimate owners of the Hobbit are American, Statistics NZ treats the project as an export of services.

The quarterly current account deficit was funded by a net inflow of foreign investment, as foreign investors bought New Zealand government bonds and increasing funds held on deposit in New Zealand bank accounts.

Today's data was below economist forecasts of the current account deficit widening to $1.64 billion in the second quarter, for an annual deficit of $10.56 billion, or 5.2% of GDP.