New Zealand’s trade deficit narrowed in June quarter, but more than doubled in a year

Goods exports increased by $1.1 billion, boosted by increases in our main export products, such as fruit. Photo / Paul Taylor

Exports have increased, but New Zealand still runs trade deficits.

The country’s seasonally adjusted current account balance was a deficit of $7.1 billion in the June quarter of 2022, down $1.7 billion from the previous quarter.

Despite deficit reduction in the fall and early winter, the country’s annual current account deficit was $27.8 billion as of June 30.

This equates to 7.7% of GDP, according to Stats NZ. A year ago, the deficit was equivalent to only 3.4% of GDP.

And the deficit revealed today in Stats NZ data was at levels close to pre-Covid highs.

The largest annual current account deficit before the pandemic was $14.7 billion in 2008, or 7.8% of GDP at the time.

During the June quarter, the seasonally adjusted deficit for goods decreased $737 million to $2.2 billion.

Goods exports increased by $1.1 billion, led by increases in our main export products such as meat and fruit.

Imports have also increased in value – but not as much.

Stats NZ said price increases for diesel, petrol and aviation gas largely propelled a $324 million jump in goods imports to $20.1 billion.

New Zealand’s net international liability position in the last quarter widened to $179.3 billion from $161.6 billion at the end of March this year.

On Monday, consensus forecasts from the New Zealand Institute of Economic Research (NZIER) revised down the short-term outlook for the national economy through 2025.

The NZIER forecast predicted continued challenges next year due to sub-optimal activity in most sectors and high inflation and high interest rates.

The consensus forecast also anticipated continued global supply chain disruptions and potential fallout from the Ukraine-Russia conflict slowing global growth.

Foreign investments

New Zealand overseas investment income in the June quarter was $2.4 billion, largely unchanged from the previous quarter.

Stats NZ said direct investment income fell by $49 million.

Revenue from foreign investment in New Zealand rose $266 million to $5.2 billion in the June quarter.