Large revisions to history caught economists by surprise
yesterday when Statistics New Zealand released New Zealand's
current account balance figures for June.
The current account deficit for the June year was $9.1
billion, or 4.3% of GDP (economic activity), much smaller
than the 4.8% of GDP the market was expecting.
Westpac senior economist Michael Gordon said the revisions
were a consequence of routine annual benchmarking using tax
''Statistics NZ discovered New Zealanders are earning more on
their overseas investments than previously thought.
Consequently, the investment income balance is stronger than
Another key surprise was profits of overseas-owned New
Zealand companies being lower than anticipated, he said.
The balance of goods and services trade over the year was a
tiny surplus, as expected. Exports of goods were affected by
the summer drought. The quarterly seasonally-adjusted deficit
was $2.2 billion, lower than the Westpac forecast of nearly
Reinsurance claim settlements proceeded at about the same
pace as the previous year. In the June quarter, $1.37 billion
of claims were settled. A total of $10.5 billion had been
settled to date, leaving $8.1 billion outstanding, Mr Gordon
''We have long argued New Zealand's current account deficit
is overstated because New Zealanders' income earned from
overseas investments is systematically understated. In recent
years, Statistics NZ has worked hard to address this
shortcoming in the data. Today's revision took the official
figures closer still to what we regard as the 'truth' of New
Zealand's balance of payments position.''
From 2014 onwards, the deficit was universally expected to
widen for a couple of years as the Canterbury rebuild
generated demand for imports and profits of foreign-owned New
Zealand companies improved in line with stronger economic
growth, he said.
Labour finance spokesman David Parker said the balance of
payment figures showed the country's net international
liabilities were 71% of GDP. That had a serious impact on
jobs and necessary investment.
''A current account deficit is quite simple. It shows we earn
less from our exports than we spend on our imports and
interest. That means as a country we are losing money and
becoming more indebted to foreign lenders. Our interest bill
and dividends paid overseas add up and the spiral
Any family in too much debt understood they had to pay it
off. As a country, it meant land and companies were sold
overseas, jobs were cut and wages stagnated.
''I won't stand for that,'' Mr Parker said.