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NZ annual current account gap widens as imports rise, foreigners reap profits

New Zealand's annual current account deficit widened to a four-year high as a reviving economy took in more imports and foreigners continued to reap greater profits here than kiwi firms garnered abroad.

The current account gap widened to $8.8 billion, or 4.1 percent of gross domestic product, in the year ended Sept. 30, according to Statistics New Zealand. The actual deficit in the latest quarter widened to $4.78 billion from a revised $1.3 billion three months earlier. A quarterly gap of $4.3 billion and an annual deficit of $8.83 billion, or 4.1 percent of GDP, were forecast in a Reuters survey.

Today's release is the first to incorporate revised statistics that include an improved surveying of spending by international visitors and students and an estimate of imports of goods below NZ Customs' $1,000 threshold. The government statistician said goods under $1,000 have become more important as kiwis buy more via the internet from overseas.

The data improvements lowered the current account gap as a percentage of GDP to an average 4.8 percent over the past 10 years from 5.6 percent, the department said.

In the third quarter, the balance on goods turned to a deficit of $1.8 billion from a surplus of $1.1 billion three months earlier. This was mainly driven by a jump in imports to $12.9 billion, a record for the series, from $11 billion, while exports fell to $11 billion from $12 billion.

The balance on income had the biggest negative impact on the current account gap, at a deficit of $2.2 billion, little changed from the third quarter. The income outflow was $3.9 billion, up from $3.77 billion in the second quarter, while the inflow improved to $1.7 billion from $1.5 billion.

The balance on services was a deficit of $581 million from a revised gap of just $7 million three months earlier. The balance on current transfers was a deficit of $149 million.

The nation's financial account showed a net investment outflow of $507 million in the third quarter as non-residents withdrew $1.8 billion of investments from New Zealand, outpacing a $1.3 billion withdrawal of New Zealand investments abroad.

Net international debt fell by $2.6 billion to $145.6 billion at Sept. 30 compared to June 30, as a $9.2 billion decline in borrowing was partly offset by a $7.1 billion fall in lending. Some $9.2 billion of the decline in borrowing related to banking sector borrowing.

Banking sector international debt was $101.6 billion, the lowest since March 2007.

The net international equity position at Sept. 30 was -$4.5 billion, the lowest position since the fourth quarter of 2005.

(BusinessDesk)

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Sub-headline : Foreign-owned NZ big banks move record profits offshore

NZ will never get rid of current account deficits until banking profits are retained locally, it's a hiding to nothing and makes NZ effectively a vassal state.

Don't forget the insurance companies as well.. bless them...

Its great we have sold all the oil that keeps the wheels of commerce turning to foreigners!

Lets not forget this government has allowed the overseas banks to be bailed out deposit holders. As a government, why would you do this, remembering these banks have much larger parent companies.

Its like the deposit holders saying to these parasite banks, take as much profit as you like, cause we are carrying the losses.

This change has effectively increased the risk for deposit holders, who now should be demanding a higher rate of return on their money. Good luck with that, because its not going to happen.

Every incentive for the banksters to maximise profits and dividend payout.