New Zealand’s current account deficit has started widening again, and the country’s fuel import bill is the main reason why.
Stats NZ published the balance of payments and international investment position figures for the June 2026 quarter on Wednesday 16 September. The quarterly headline was a seasonally adjusted deficit of $3.8 billion, $666 million narrower than the March quarter. The annual figure, which smooths out the seasons and is the one economists watch, went the other way.
The current account deficit for the year to 30 June 2026 was $14.58 billion, or 3.2 percent of gross domestic product.
Against the same point a year earlier that is an improvement, because the deficit for the year to June 2025 was $15.8 billion, or 3.6 percent of GDP. Against the last two quarters it is not. The annual deficit bottomed out at $13.48 billion in the year to December 2025, widened to $13.69 billion in the year to March 2026, and has now widened again. As a share of the economy the ratio ran 3.0 percent, then 3.0 percent, then 3.2 percent.
A run of improvement that lasted two years has stopped. Over the six months to June the deficit grew by just over $1.1 billion.
The current account is the country’s running tally with the rest of the world, adding up what New Zealand earns selling goods and services offshore, the investment income flowing in and out, and transfers such as foreign aid and remittances. A deficit means New Zealanders as a group are spending more internationally than they earn, and the gap has to be funded by borrowing abroad or selling assets to foreign owners.
The fuel import bill
Goods are where the deterioration is concentrated. The annual goods deficit was $656 million in the year to December 2025. Six months later it was $3.25 billion, close to five times larger.
Imports are running ahead of exports. Goods imports for the year to June 2026 were $88.1 billion, up 7.5 percent on the December 2025 year. Goods exports were $84.8 billion, up 4.4 percent. Exports are growing, but not fast enough to keep pace.
In the June quarter alone, seasonally adjusted goods imports rose $1.8 billion, or 8.2 percent, to $24.1 billion. Stats NZ said the rise was led by petroleum and petroleum products, with higher prices for diesel, petrol and jet fuel all contributing. Goods exports rose $1.4 billion, or 6.6 percent, to $22.6 billion, led by dairy and meat.
The mechanism is worth spelling out, because it is a price effect rather than an appetite effect. New Zealand imports nearly all of its refined fuel. When the world price of diesel, petrol and jet fuel rises, the same number of litres arriving at the same wharves costs more. The import bill goes up, the goods deficit widens, and the country funds the difference offshore. None of that requires anyone here to burn a single extra litre.
It is the same shock that showed up elsewhere in the quarter. GDP grew just 0.2 percent in the three months to June, with hospitality, accommodation and road transport all going backwards. At the pump, the average price of 91 unleaded reached $3.25 a litre on Friday 18 September, and the Automobile Association has said motorists should not expect much relief before Christmas.
Tourism and the services balance
Services are pulling the other way, and hard enough to matter. For the year to June 2026 the services balance was a surplus of $306 million, against a deficit of $1.60 billion a year earlier. That is a swing of just over $1.9 billion in twelve months, and the first annual services surplus in at least the two years of quarterly figures Stats NZ publishes in this table.
Travel exports did most of the work. These are what overseas visitors spend while they are in New Zealand, and they came to $18.59 billion for the year to June 2026, up $2.53 billion or 15.8 percent on a year earlier. Education-related travel, which captures what international students spend on fees and living costs, was $4.98 billion, up from $4.30 billion.
In the June quarter itself the seasonally adjusted services balance swung $300 million, from a $117 million deficit in March to a $183 million surplus. Without that visitor spending the current account picture would look considerably worse than it does.
Net foreign liabilities and external debt
The other headline out of the release looks like unambiguous good news, and mostly it is not.
New Zealand’s net international liability position, which is everything the country owns abroad minus everything foreigners own here, narrowed to $178.3 billion at 30 June 2026. That is $13.5 billion lower than the $191.7 billion recorded three months earlier. As a share of GDP it fell from 42.5 percent to 39.0 percent, a drop of three and a half percentage points in a single quarter.
Almost none of that came from New Zealand paying anything back.
Stats NZ breaks the change down. The value of New Zealand’s international assets rose $28.6 billion over the quarter, to $523.3 billion. Of that increase, $19.1 billion was market price changes, mostly rises in offshore share markets, and another $6.5 billion was valuation changes on financial derivatives. Only $520 million came from actual transactions, meaning money genuinely sent offshore to buy assets.
In plain terms, the shares that KiwiSaver funds and other New Zealand investors already held in overseas markets went up in price. Nothing was repaid and nothing extra was earned. If those markets fall next quarter, the ratio goes straight back up.
The measure that strips all of this out tells a different story. Net external debt, which excludes equity and derivatives and counts only what has to be serviced and repaid, widened by $2.8 billion over the quarter to $225.67 billion at 30 June. As a share of GDP it did not move at all, sitting at 49.4 percent in both the March and June quarters. Gross external debt was $448.1 billion, up from $424.4 billion a year earlier.
So the headline net position improved by three and a half points of GDP in three months while the debt ratio stood perfectly still.
There is one genuine improvement buried in the debt figures. Debt servicing took 11.1 percent of export earnings in the year to June 2026, down from 12.4 percent a year earlier. That is not because the debt shrank. It is because exports grew. Goods and services exports were 26.6 percent of GDP for the year to June, up from 25.0 percent a year earlier.
The one part of the quarterly account that clearly improved was primary income, the gap between what New Zealand earns on its investments overseas and what foreign investors earn here. That deficit narrowed to $2.3 billion from $3.1 billion, as income from New Zealand’s investments abroad rose $1.1 billion to $5.3 billion on dividends from overseas share portfolios.
“Profits earned from foreign investors ownership of shares in New Zealand businesses increased in the June 2026 quarter,” Stats NZ international accounts spokesperson Shanna Dilworth said.
The next release, covering the year ended 31 March 2026, is due on 30 September. Figures for the September 2026 quarter are not out until 16 December.
Have you noticed higher fuel costs working their way through to the price of other things you buy? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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