New Zealand's external accounts turned a paler shade of red in the March quarter as demand for imports crumpled.
The current account deficit, seasonally adjusted, was $2.7 billion, $1 billion less than in December.
It reduces the annual deficit to $15.2 billion from $16.1 billion in December. But that is
still equivalent to 8.5 per cent of gross domestic product, a high level by historical and international standards. The average current account deficit in OECD countries last year was 1.4 per cent of GDP.
For the first time in six years the quarterly balance on goods was a surplus. Imports fell $1.3 billion, outstripping a $400 million decline in exports.
The import fall reflected both lower prices for oil and other commodities and lower volumes, notably of cars but evident across a broad range of imported goods.
The fall in exports reflected lower prices - the largest quarterly decline for 52 years - more than offsetting a rise in export volumes.
As usual the investment income deficit accounted for the vast majority of the deficit - $13.4 billion of the $15.2 billion annual shortfall.
It was almost unchanged in the March quarter as a $200 million fall in the income from New Zealand investment abroad was offset by a fall in income from foreign investment in New Zealand.
None of the $1.5 billion in profits on foreign direct investment in New Zealand was reinvested. It was all repatriated as dividends.
At 7.1 per cent of GDP the investment income deficit is equivalent to 26 days' output from the economy.
The stock of foreign claims on the economy - largely debt - net of New Zealand investment abroad climbed to $177 billion or 92 per cent of GDP, from $167 billion and 93 per cent of GDP in December. It equates to $41,000 ahead.
"The improvement in the deficit is welcome, the reasons for it not so much," said Westpac economist Michael Gordon.
"Weak import demand, lower company profits and low interest rates reflect the fact that New Zealand is at a particularly low point in the economic cycle."
