I've never worried much about current account balances. If you have a flexible exchange rate, it sorts itself out.
But my excellent colleague Bryce Wilkinson points to one of the reasons for the current large current account deficit.
Just look at this.
Service exports, as percent of GDP, dropped to levels we haven't seen since the 70s.
Borders closed in 2020 - for good reason.
Mid 2020, the Universities had decent plans for running their own quarantine facilities - or at least ones that could be built on. Government said no. International student numbers collapsed. Before Covid, we had around 120,000 international students. In 2022, less than 15,000. [Note that those numbers won't just be university though.]
Every course taught to an international student is the export of a service. International students paid ridiculously high fees that cross-subsidise domestic students and research. And contribute to the export of service figures that feed into the current account numbers.
We put up a proposal for scaling MIQ. Shift MoH/MBIE from running the system to setting and enforcing standards, and let the system scale up. There was incredible opportunity. We could have been *the* place where students still had in-person lectures. And where professionals able to work remotely could move, work, live freely, get paid by their home-country employers while contributing to the economy here.
Government said no.
International tourism ended. Every dollar spent by an international tourist was the export of a service.
Anyway, just a bit of backstory on why the current account numbers are as they are.
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