New Zealand's current account deficit worsened to $3.91 billion in the June quarter, Statistics New Zealand (SNZ) said today.
The current account, also known as the balance of payments, measures all of New Zealand's transactions with the outside world.
The annual deficit was $14.97 billion, up from $14.21b for the year ended March.
An economist estimated the annual deficit to be 8.3 percent of gross domestic product, although SNZ will not release that figure until GDP data is published next Thursday.
The result was worse than economists' forecasts, with the median expectation in a Reuters poll having been for a $3.3b deficit for the quarter.
The main factors swelling the deficit were a rise in goods imports, mainly petroleum and petroleum products and in capital goods related to the oil industry, and foreign investors earning more on their New Zealand investments.
Seasonally adjusted the current account deficit was $4.63b in the June quarter, an increase of $1.1b from the March quarter.
Seasonally adjusted imports of goods were up $753 million in the quarter to $11.64b, while income from foreign investment in this country was up $214 million.
Goods exports were down $115m seasonally adjusted to $10.58b, with a significant drop in dairy product volumes being the main cause of the drop.
It was the second consecutive quarterly fall in dairy product volumes and was mainly the result of drought earlier in the year, SNZ said.
A withdrawal of New Zealand investment from abroad was the key feature of current account financing in the June quarter, SNZ said.
It was the first time since the June 2006 quarter that the current account deficit had been financed that way.
The $5.2b divestment from abroad was primarily in the form of reduced lending to overseas, partly offset by a $600m withdrawal of foreign investment from this country.
Deutsche Bank chief economist Darren Gibbs said the data was a timely reminder of just how exposed New Zealand was to international capital markets.
UBS senior economist Robin Clements said that while the NZ dollar had been a bit firmer today, the risk was that it would get pressured downwards on the back of the figures.
The net International Investment Position showed liabilities exceeding assets by $159.2b, an increase of $5.3b since March 31.
The June quarter investment income deficit of $3.71b was $232m larger than the March deficit. Foreign investors' earnings from their investments in this country were up $214m, while New Zealand investors' earnings from abroad were down $18m.
It was the second consecutive quarter that income earned from New Zealand's investments abroad had fallen, and followed a sustained period of increases in earnings from overseas, SNZ said.
