NZ debt heading for 'banana republic' status

In the year to June, foreign investors hoovered more profits out of the country while strong demand for imports and higher oil prices saw even more cash pumped offshore.

That pushed our current account - which measures all our dealings with the rest of the world, including investments and trade - to a deficit of $11.89 billion, close to 8 per cent of GDP.

Statistics NZ said the main factors were a rise in income paid to offshore investors and an increase in the value of imports, particularly petrol and other fuel which rose by 32.5 per cent over the year.

The deficit was well up on the 7.5 per cent of GDP most economists had expected and a long way above the 5.2 per cent for the June 2004 year when the deficit was $7.2 billion.

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