New Zealand recorded a seasonally adjusted current account surplus of $340 million in the September quarter - the first such surplus since late 1988.

A surplus in the current account means that New Zealand's earnings overseas are greater than its spending.

The recession has caused people to tighten their belts and spend less - which means importers spent less overseas on bringing goods into the country.

Publishing the data today, Statistics New Zealand (SNZ) said the change from a deficit to a surplus was mostly due to a narrowing of the investment income deficit. This indicates a drop in profits by companies who have a presence in New Zealand but are owned overseas.

The actual balance of payments was a better than expected deficit of $1.4 billion in the September quarter, compared to the median forecast of economists in a Reuters poll for a deficit of $2.6b.

The current account, also known as the balance of payments, measures all of New Zealand's transactions with the outside world.

The annual deficit was $5.7b, which amounts to 3.1 per cent of gross domestic product (GDP). That compared to a current account deficit of $10.4b or 5.6 per cent of GDP in the June year, and $15.4b or 8.4 per cent of GDP for the September 2008 year.

SNZ said the investment income deficit, which is not seasonally adjusted, was $574m in the September quarter, $792m smaller than the deficit for the previous three months.

The fall in the income deficit in the latest quarter was mainly due to a fall in profits earned by foreign investors from their direct investments in this country. Similarly to the June quarter, that fall in company profits was influenced by $1.4b of company tax transactions in the banking sector brought into account during the quarter.

Interest paid overseas also fell, while income from New Zealand investment abroad rose $149m due to increased earnings by New Zealand-owned subsidiaries operating overseas.

Excluding the impact of the unusually large company tax transactions, the current account deficit for the September year would be $7.75b, which is 4.2 per cent of GDP, SNZ said.

Deutsche Bank chief economist Darren Gibbs said the smaller deficit was a product of recession. It was not a great story that the investment balance had collapsed because no one was making any money. The one-off bank payments were "pretty significant".

"The real test will come as the economy goes into recovery phase in 2010 and we'll see how strongly imports come back and how strong the profitability comes back," Mr Gibbs said.

The seasonally adjusted balance on goods was a surplus of $734m, $55m lower than three months earlier.

Exports of goods fell $665m in the quarter, mainly due to lower volumes of meat exports and lower prices for dairy exports. Overall, export prices fell 5.2 per cent, following an 11.9 per cent fall in the June quarter, SNZ said.

Goods imports fell $609m, as prices for all categories except petroleum and petroleum products fell. That was partly offset by a rise in import volumes in the September quarter, particularly for intermediate goods.

The $9.7b decrease in the annual current account deficit, compared to a year earlier, was due to a $5.75b fall in the investment income deficit, as well as the goods balance changing from a deficit to a surplus.

Profits earned by foreign-owned firms in this country fell $4.3b over that time, affected by the unusually large company tax transactions, as well as a general fall in company profits, SNZ said.

The balance of goods changed from a $2.3b deficit for the September 2008 year, to a $2.3b surplus for the latest year.

Imports of goods fell $4.9b over that time, as prices for petroleum and petroleum products fell from their peak in the September 2008 quarter. The value of goods exports remained relatively stable over the same time, falling $261m.

Net international liabilities were $173.3b or 93.7 per cent of GDP at September 30, compared to $171.7b or 93.3 per cent of GDP at June 30.