The $15.5 billion current account deficit reflects a range of factors including the high costs of petrol imports during the period, Council of Trade Unions Economist Peter Conway said today.

“However, the focus on exports and imports of goods and services should not obscure the fact that $13.7 billion (88%) of the current account deficit is due to the negative investment income balance.”

“This reflects interest on overseas debt, dividends and capital repayments accruing to overseas owners of New Zealand firms and offshore bank borrowing to fund mortgage lending.”

“In the long run we can only address the persistent current account deficit by promoting greater savings in New Zealand and greater levels of New Zealand investment.”

Peter Conway said that the $166 billion net accumulated debt is a huge drag on the economy and means that there is now a high reliance on relatively low public debt (19 percent of GDP compared with 37 percent in 1999) to assist in heading off the worst effects of the global financial crisis on jobs, firms and households.