Falling import costs - mostly due to lower oil prices - drove a drop in the country’s current account deficit for the year to 31 March.
The deficit fell from 9% of GDP to 8.5%, or from $3.72 billion to $2.68 billion, Statistics New Zealand announced this morning.
That is still high by both international and historical New Zealand standards. The average expectation among market economists was for 8.4%.
The annual deficit is now under $3 billion for the first time since March 2005, and the goods and services balance is now in surplus (by $863 million) for the first time since December 2003.
As well as the lower oil prices, there are also fewer imports, due to the recesion.
Investment income is now well into deficit – it is now $3.272 billion for the year, growing $35 million over the quarter.
The main reason is a drop in income from New Zealand investment abroad – down $192 million - , partially offset by a fall in investment income from foreign investment in New Zealand, which fell $158 million.
The quarterly deficit was financed by an inflow of $2.1 billion borrowed from abroad.
Overall, the figures show New Zealand is still very much a debtor nation – the country’s liabilities exceed assets by $176.6 billion or 98.2% of GDP.