NZ only owes $140 billion, not $148 billion

Revisions to how economic data is collected means the country’s debt position is not as large as previously thought.

Today’s current account figures show – as expected – a slight deterioration in the New Zealand’s position, with the deficit rising from $1.53 billion in the March quarter to $2 billion in the June quarter, or from 3.6% of GDP to 3.7%.

That is the quarterly shift and was not unexpected by economists: the average forecast was for the deficit to move to 4% of GDP, but this was without the benefit of the data revisions Statistics New Zealand unveiled this morning.

Those data revisions, caused by Statistics New Zealand improving how it values the country’s international assets, added $10 billion to the measure of New Zealand’s overseas assets.

This new data includes shares held by New Zealand investors in Australia, assets held by small fund managers, an student loans owed by New Zealanders based overseas.

The improvement is not small in dollar terms: as a proportion of the country’s total debt though it is small.

New Zealand has had a current account deficit since the combined shock in 1974, of a collapse in the wool price, the United Kingdom joining the European Union, and the first oil crisis.

Over that time the debt has piled up and although today's revisions shave a substantial amount off that, in dollar terms, New Zealand still owes $140.2 billion, or 70% of GDP.

This is still an increase: the revised figure for the March quarter is now $136 billion , and not, as was thought at the time, $148.2 billion.

While exports are up, with a rise of $400 million, mostly due to rises in income from dairy and, to a lesser extent, other agricultural commodities. Imports are up $200 million, mostly due to the increase in the costs and volume of petroleum products.

Spending by overseas visitors fell by about $100 million, due to the Christchurch earthquakes and the Chilean volcanic ash cloud disrupting incoming flights.

The goods balance is in surplus – on an annual basis, by $3.4 billion, up $248 million from the previous year. The goods balance has been in surplus since mid-2009, after a five year period in deficit.

The annual services balance is in deficit, by $925 million, up $363 million. This is the third annual deficit for services.