Finance Minister Bill English says people need to spend less and save more to help restore New Zealand's financial position.
The latest balance of payments figures, for the final three months of 2008, reveal the current account deficit for last year was $16.1 billion.
The current account, which compares income entering the country with outflows, is seen as a key measure of a country's ability to service its debts.
Falling tourism earnings and an increase in imports contributed to the deficit in balance of payments.
The quarterly deficit was equal to 8.9% of the economy's annual output, or gross domestic product, up from 8.5% at the beginning of the quarter and slightly less than economists' expectations.
The increase in imports came from increased freight costs associated with the importation of vehicles.
Mr English says deficit is serious, but there is not much the Government can do directly to improve it. "You can't turn it around directly, but it's starting to change because households are starting to save more and borrowing less - and that's a good thing.
"We hope the dollar will continue to give exporters a bit more profitability, because that'll make a difference too."
Mr English says the deficit got much worse in the past nine years under the previous Labour-led government.
However, the data contained one positive result for the economy, as the investment income deficit fell for the second consecutive quarter to $3.1 billion.
Credit ratings agency Standard & Poor's singled out the deficit earlier this year when it warned of a credit downgrade. But economists say the deficit has probably peaked and they expect the lower dollar to improve New Zealand's trading position over time.