The deficit between what the economy earns and what it spends hit $33.8 billion for the year ended December, equating to a record 8.9 percent of the value of the economy, the highest since the current series began in 1988.
Broadly speaking, the country is living well beyond its means, which is filled by borrowing.
Stats NZ senior manager Paul Pascoe said the increased deficit was due largely to an increase in the import of goods and services, notably machinery, fuel and vehicles, and an increase in travel costs.
“Since New Zealand’s borders opened more New Zealanders have been travelling overseas. The spending on both air transport and travel contributed to the rise in services imports for the year.”
Imports grew 25.8 percent while export earnings were up only 16.8 percent, with tourism, a key foreign exchange earner, still hampered by the slow recovery in world travel after Covid-19 restrictions were lifted.
Another factor in the deficit was foreign investors making more out of their investments in Aotearoa than New Zealanders did from their overseas holdings.
The data also showed an inflow of $3.3b into the country in the final three months of the year, which covered part of the deficit, while New Zealand investors scaled back their overseas investments to the tune of $4b compared to a $686m reduction in foreign investments here.
The difference between New Zealand’s financial assets and liabilities with the rest of the world narrowed slightly to a deficit of $193b, about half the value of the economy.
The size of the balance of payments deficit matters to ratings agencies, which could downgrade New Zealand’s rating making borrowing more expensive if there were concerns it was getting out of control.