Wednesday, 20 June 2012 11:30

Deficit widens as dairy prices drop

Written by 

Falling dairy prices were a key contributor to a widening current account deficit in the March quarter, Statistics New Zealand says.

New Zealand's current account deficit was $2.8 billion in the March quarter which is $0.6 billion larger than the December 2011 quarter deficit.

For the March 2012 year, New Zealand's current account deficit was $9.7 billion (4.8% of GDP). This compares with a deficit of $7.2 billion (3.7% of GDP) for the March 2011 year.

The quarterly deficit increase to $2.8 billion was mainly caused by a turnaround in New Zealand's international trade in goods and services, which was a deficit for the first time since the December 2008 quarter.

Dairy products, crude oil, and fruit drove goods exports down, while imports of crude oil increased.

"The value of dairy exports fell despite an increase in volumes, as dairy prices fell for the third quarter in a row," balance of payments manager John Morris says.

Spending by visitors to New Zealand also fell as visitor numbers dropped following the Rugby World Cup.

Profits earned by foreign-owned companies in New Zealand fell in the March quarter, partly offsetting the falls in exports of goods and services.

Despite the fall in profits, earnings reinvested in New Zealand by these companies increased $0.4 billion this quarter. I

In contrast, dividends paid to overseas investors by these companies fell $0.8 billion, to their lowest level in over seven years.

The year-end deficit increase to $9.7 billion was mainly due to higher profits earned by foreign-owned banks and increased imports of petroleum and petroleum products. Services imports and transfer payments to overseas also increased over this time, due to the rising costs of reinsurance in the latest

year.

Despite the current account deficit in the March 2012 quarter, New Zealand's net international liability position decreased to $143.2 billion (70.9% of GDP) at 31 March 2012, from $146.3 billion (72.9% of GDP) at December 31, 2011.

More like this

Inequality 'is on the rise'

Economist Shamubeel Eaqub is warning that inequality between countries has fallen markedly over the past 200 years but inequality and political polarisation within countries was on the rise.

Fonterra sticking to $10/kgMS milk price

Fonterra has reaffirmed a forecast milk price mid-point of $10/kgMS for its farmer shareholders, with just over two months of the 2024-25 season left to run.

Featured

Farmers will adapt amid global trade turmoil

New tariffs imposed by President Donald Trump signal an uncertain future, but New Zealand farmers know how to adapt to changing conditions, says Auriga Martin, chief executive of Farm Focus.

National

Machinery & Products

Alpego eyes electric power harrow

Distributed by OriginAg in New Zealand, Italian manufacturer Alpego recently showed its three metre Alysium electric power harrow at the…

» Latest Print Issues Online

The Hound

Dodgy!

OPINION: If you believe Maori Party president John Tamihere’s claim that “nothing dodgy” occurred at Manurewa Marae during the last…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter