Large revisions to history caught economists by surprise yesterday when Statistics New Zealand released New Zealand's current account balance figures for June.
The current account deficit for the June year was $9.1 billion, or 4.3% of GDP (economic activity), much smaller than the 4.8% of GDP the market was expecting.
Westpac senior economist Michael Gordon said the revisions were a consequence of routine annual benchmarking using tax data.
''Statistics NZ discovered New Zealanders are earning more on their overseas investments than previously thought. Consequently, the investment income balance is stronger than previously thought.''
Another key surprise was profits of overseas-owned New Zealand companies being lower than anticipated, he said.
The balance of goods and services trade over the year was a tiny surplus, as expected. Exports of goods were affected by the summer drought. The quarterly seasonally-adjusted deficit was $2.2 billion, lower than the Westpac forecast of nearly $3 billion.
Reinsurance claim settlements proceeded at about the same pace as the previous year. In the June quarter, $1.37 billion of claims were settled. A total of $10.5 billion had been settled to date, leaving $8.1 billion outstanding, Mr Gordon said.
''We have long argued New Zealand's current account deficit is overstated because New Zealanders' income earned from overseas investments is systematically understated. In recent years, Statistics NZ has worked hard to address this shortcoming in the data. Today's revision took the official figures closer still to what we regard as the 'truth' of New Zealand's balance of payments position.''
From 2014 onwards, the deficit was universally expected to widen for a couple of years as the Canterbury rebuild generated demand for imports and profits of foreign-owned New Zealand companies improved in line with stronger economic growth, he said.
Labour finance spokesman David Parker said the balance of payment figures showed the country's net international liabilities were 71% of GDP. That had a serious impact on jobs and necessary investment.
''A current account deficit is quite simple. It shows we earn less from our exports than we spend on our imports and interest. That means as a country we are losing money and becoming more indebted to foreign lenders. Our interest bill and dividends paid overseas add up and the spiral continues.''
Any family in too much debt understood they had to pay it off. As a country, it meant land and companies were sold overseas, jobs were cut and wages stagnated.
''I won't stand for that,'' Mr Parker said.
