Current Account

The Current Account is the flow section of the balance of payments, the full statement of New Zealand residents' transactions with non-residents. It covers goods, items changing ownership between residents and non-residents, services, intangible work such as travel and transport, and income flows. Primary income means earnings from capital and labour, while secondary income means one-sided transfers such as aid and remittances. A deficit, where payments exceed receipts, is usual and financed through the financial account, not through debt stocks or customs crossings.

Reference quarters end 31 March, 30 June, 30 September and 31 December, with publication about 2.5 to 3 months later at 10:45am New Zealand time. Dates are pre-announced, with changes made public, under strict embargo lock-up with only a short briefing for ministers beforehand. Each release brings the investment position stock snapshot, financial account, data files, prior-quarter revisions, time-series tables and methods notes, with fuller revisions each June quarter.

A negative figure is a deficit funded by borrowing abroad or using foreign assets. The annual balance relative to GDP shows its scale, and a narrower deficit means revenues closer to expenses.

4 balances sum to the headline balance, so each can widen or narrow the deficit.

• Goods balance: movable goods changing ownership between residents and non-residents, exports minus imports.
• Services balance: services traded between residents and non-residents, including travel and transport, exports minus imports.
• Primary income balance: earnings from capital such as dividends and interest plus labour pay, earned abroad minus earned by foreigners in New Zealand.
• Secondary income balance: one-sided transfers such as foreign aid, remittances and taxes, received minus paid.

In the year ended 31 December 2022 the deficit reached NZ$33.8 billion, 8.9% of GDP, the largest ratio since March 1988. It was NZ$12.7 billion wider than the year ended 31 December 2021, which recorded 6.0% of GDP. A NZ$10.0 billion wider goods and services deficit and a NZ$2.7 billion wider income deficit drove the annual widening.

The seasonally adjusted deficit widened to NZ$8.5 billion from NZ$7.1 billion, while the unadjusted deficit narrowed to NZ$9.5 billion from NZ$11.4 billion. Readers must state which measure they use, since a record annual ratio can coincide with mixed quarterly signals.

1. Classify transactions: record credits, receipts and exports, and debits, payments and imports, for goods, services, primary income and secondary income. Start goods from customs records, then remove items without ownership change, adjust for oil stocks and consignment goods, and move freight and insurance to services. The Quarterly International Investment Survey is the main source for investment income.

1. Component balance: subtract debits from credits for each part, as goods exports minus goods imports, since 0 balances are unusual.

1. Current account balance: sum the 4 balances, where debits above credits means a deficit, the usual New Zealand case. For example, goods -NZ$574m plus services -NZ$645m plus primary income -NZ$4,200m plus secondary income -NZ$99m equals about -NZ$5.5b.

1. Seasonal adjustment: combine adjusted goods and services with actual primary and secondary income, using trends only for income without seasonal patterns.

1. Annual ratio: sum 4 quarters for the year-ended balance, then divide by GDP to show significance against total output. The residual, net errors and omissions, equals all credits minus all debits across current, capital and financial accounts.