Exports Trim Current Account Deficit to $5.9B

The seasonally adjusted current account deficit narrowed to $5.9 billion in the December 2024 quarter, according to figures released by Stats NZ today.

The current account deficit was $475 million narrower than the previous quarter due to an increase in the value of services exports (up $688 million) and goods exports (up $669 million).

"Spending by overseas visitors while in New Zealand led the increase in services exports, while dairy and meat led the increase in goods exports," international accounts spokesperson Viki Ward said.

Services balance in surplus

In the December 2024 quarter, the seasonally adjusted services balance was a $41 million surplus, compared with a deficit of $424 million in the September 2024 quarter.

Services exports increased by $688 million, driven by a $401 million increase in travel exports.

"In the December 2024 quarter, seasonally adjusted exports of travel services were higher than the December 2019 peak for the first time," Ward said.

"Overseas visitor spending has increased beyond the level seen before the COVID-19 pandemic. Visitor numbers also increased in the December 2024 quarter, although the number of visitors remain lower than before the pandemic."

Services imports increased by $223 million in the December 2024 quarter.

Goods deficit narrows

The seasonally adjusted goods deficit narrowed to $1.7 billion in the December 2024 quarter, following a deficit of $1.8 billion in the September 2024 quarter.

Goods exports increased $669 million in the December 2024 quarter to $18.4 billion. Exports of milk powder, butter, and cheese, followed by meat and edible offal led the increase. A decrease in fruit exports partially offset the overall increase.

Goods imports increased $582 million to $20.1 billion in the December 2024 quarter.

Financial account records a net outflow

In the December 2024 quarter, the financial account recorded a net outflow of $3.2 billion. A current account deficit is expected to be financed by net inflows in the financial account. The incoherence among the current, capital, and financial accounts in the December 2024 quarter reflects challenges in measuring investment transactions.

International investment position

At 31 December 2024, New Zealand's net international investment liability position was $210.7 billion, compared with $209.8 billion as at 30 September 2024.

A combination of purchases of investments offshore by domestic investors, onshore by overseas investors, and the revaluation of these investments led to increases in New Zealand's asset and liability positions at 31 December 2024.

In the December 2024 quarter, the value of New Zealand holdings of international assets increased by $34.1 billion to $438.9 billion. New Zealand's liabilities to the rest of the world increased by $35.0 billion to $649.6 billion.

"A key element of revaluations this quarter was the depreciation of the New Zealand dollar against major currencies," Ward said.

The net international investment position represents the difference between New Zealand's financial assets and liabilities with the rest of the world. New Zealand has a net liability position as we have more liabilities than assets with the rest of the world.

Annual current account deficit $26.4 billion

New Zealand's annual current account deficit was $26.4 billion (6.2 percent of gross domestic product (GDP)) in the year ended 31 December 2024.

This compares with a $27.3 billion deficit in the year ended 30 September 2024 (6.5 percent of GDP).

A current account deficit indicates that New Zealand is spending more than it is earning overseas. The size of the current account balance in relation to GDP shows its significance to New Zealand's overall economy.