The legacy of decades of current account deficits is that New Zealand has net international liabilities of $150 billion.
That number is temporarily flattered by the $6.7 billion of earthquake-related reinsurance claims which have yet to be settled and which in the meantime count as international assets.
Excluding them, the net international investment position is $157 billion in the red, or the equivalent of 73 per cent of GDP, a conspicuously high level by international standards.
The cost of servicing those net liabilities (the investment income deficit) was $2.2 billion in the September quarter and $9 billion for the year.
Imports of goods were $12.6 billion in the quarter, seasonally adjusted, up $1.1 billion on June. Much of the increase related to the purchase of military helicopters, Statistics New Zealand said.
Exports of goods rose $700 million to $12 billion, mainly reflecting higher prices for dairy and forest products.
Imports of services, mainly travel and transport, rose $81 million to $3.8 billion as more Kiwis travelled overseas, while exports of services were flat at $4.1 billion.
Statistics NZ has changed the way it gathers information on how much international visitors spend in New Zealand. Instead of interviewing people in airport departure lounges, it now collects their email addresses and contacts them later.
The effect has been an upward revision to the historical track for exports of services. That has been partially offset by improved data on goods worth less than $1000 and bought online from abroad.
The net effect of these historical revisions has been to reduce the annual current account deficits since 2000 by between 0.4 and 1.4 percentage points.
And by reallocating some of the consumption recorded in the past from New Zealand households to international visitors, the revisions make the households saving rate look slightly less bad.
Deutsche Bank chief economist Darren Gibbs expects the current account deficit to narrow to about 2 or 2.5 per cent of GDP over the next 12 months as the impact of the current exceptionally strong terms of trade, led by high dairy prices, continues to work its way through.
"Thereafter we expect the deficit to begin to widen as import volumes increase - reconstruction in Canterbury is likely to be import intensive - and as a rising interest rate environment increases the cost of funding New Zealand's considerable net external liabilities," he said.
Bank of New Zealand economist Doug Steel also thinks the current account deficit will shrink over the coming quarters as the high and rising terms of trade coincides with a strong primary production rebound from this year's drought.
"That said, having elevated terms of trade, and the increased purchasing power that that affords, does not necessarily mean that the current deficit will shrink. It depends how people respond to the increased purchasing power."
That applied not only to people who were earning more, but also to those who enjoyed lower prices as a result of the attendant strengthening of the kiwi.
ANZ economist Mark Smith said that although the current account deficit remained modest by historical standards, ensuring New Zealand's external debt and deficit metrics remained off the radar screen of overseas creditors would depend on fiscal restraint and households living within their means.
"With an election year looming and consumer sentiment at elevated levels, this is likely to prove a tough ask."
