Statistics New Zealand says merchandise imports last month recorded their second largest monthly fall in value in 16 years.
The fall helped narrow New Zealand's merchandise deficit to $163 million in July.
Radio New Zealand's economics correspondent says the 20.9% fall in imports in July was the second largest drop since 1993. Only May's fall of 21.8% was higher.
Petrol, vehicles, parts and accessories were the biggest contributors to the fall.
Exports fell 1.1% in July compared to the previous month - the smallest monthly fall since last September.
This was mainly due to lower oil prices and reflects lower volumes from the Tui oil field.
Earnings from dairy were unchanged from last July although volumes were 50% higher.
Earnings from China rose 52% compared to the same month a year ago driven by a big increase in log sales.
On an annual basis, the deficit is $2.5 billion - its lowest level in six years.