Keywords: Macroeconomics & Money;
I really wanted to project foreign liabilities relative to all assets. It is a different story if the liabilities rise more slowly than the assets or vice versa.
Statistics New Zealand provides estimates of ‘Net Capital Stock’ which is the accumulated sum of depreciated fixed investment. In March 2007 this amounted to about $505b. To this can be added the value of inventories which includes the stocks of commerce (wholesale, retail and manufacturers) plus the value of livestock and the trees. They amounted to about $43b in 2007.
The major omission is the (unimproved) value of land. Blue Hancock of Quotable Value kindly provided me of an estimate of the Gross Rating Land Values as $584b in 2007 (some of the valuations are 2005 and 2006 ones).
Summing the three gives a total value of $1,132b for 2007, and implies a capital to GDP ratio of 6.8 years. (This might seem a bit high; I expected 4 to 5).
Hancock also supplied the Gross Rating Capital Value of $1,031b which (by deduction) suggests Gross Improvements $446m which is quite close to the $429m aggregate for the SNZ subcategories of residential building, non-residential building and other construction. The former includes the value of the stocks of trees, but the latter includes the cost of roads and such like. (Even so, I was surprised how little of New Zealand capital is in plant and machinery, transport equipment and intangibles assets; $75b in 2007 according to SNZ. Add in livestock and commerce stocks and it is less than $120m.)
Suppose the value of New Zealand’s assets was near $1,000b – a trillion dollars. Gross Foreign Owned Liabilities (that is ignoring off shore assets owned by New Zealanders) amounted to about $264m in 2007. So around one quarter of New Zealand capital assets are owned by foreigners. (The notion of ‘ownership’ includes New Zealand’s domestic assets either owned offshore or are a security for a loan sourced from offshore.)
This figure has to be treated as an order of magnitude only. Aside from the inconsistencies already discussed, there is unlikely to be exact consistency between the valuation methods of the two aggregates. For instance SNZ’s capital stock is based on the depreciated value of the installation cost of an asset, while the Gross Foreign Owned Liabilities values the same asset as that implicit is a company share price.
In the end I thought there were too many uncertainties to project these numbers, even if I had the detailed components of the (Treasury) forecast which are necessary.