Although New Zealand's current account deficit narrowed sharply in the December quarter, profits earned by foreign-owned companies rose to their highest level in four years.
Record dairy exports pushed the current account deficit for the December quarter to its smallest since the March quarter of 2010.
Statistics New Zealand says record dairy exports helped narrow the deficit to $837 million, compared with the revised $2.58 billion deficit in the September quarter.
The annual deficit narrowed to $7.5 billion, or 3.4 percent of annual economic growth, from $8.9 billion, or 4.1 percent, in September.
Countering the diary effect, the profits earned by foreign-owned companies pushed the income deficit up by $330 million.
Westpac economist Michael Gordon says this isn't necessarily a bad thing because it's the sign of a healthier domestic economy in New Zealand.
Mr Gordon expects the deficit to continue to improve over the course of this year.