News Zealand's annual current account deficit came to $11.2 billion in the year to June - 3.3 per cent of GDP – and $6.5b wider than for June 2020 year, Stats NZ said.
The change from a services surplus to a services deficit was the biggest driver of change to the current account, it said.
New Zealand has only had an annual services deficit twice in the past 20 years; in the year ended March 2021, and year ended June 2021.
The current account records a nation's transactions with the rest of the world - specifically its net trade in goods and services, its net earnings on cross-border investments, and its net transfer payments.
For the June quarter, the seasonally adjusted current account deficit narrowed to $3.0b in the June 2021 quarter thanks to a lift in the value of exports.
The current account deficit was $2.2b narrower than the previous quarter due to an increase in value of goods exports (up $1.4b) and services exports (up $1.7b).
These increases to exports narrowed the goods deficit and the services deficit by more than $1.0b each.
Seasonally adjusted goods exports were worth $16.0b in the June 2021 quarter, a new high for the data series, Stats NZ said.
Stats NZ said that despite the turmoil of the Covid-19 pandemic, the value of New Zealand's international assets by the end of the quarter had increased by $33.0b compared with 30 June 2020.
The biggest driver to asset growth was portfolio investment assets, which increased by $49.9b, it said.
The annual deficit of 3.3 per cent of GDP was in line with market forecasts.
"That said, the deficit for the quarter was narrower than we and the market expected, which was equally offset by revisions to history over the balances for September 2020 through March 2021," Westpac economist Nathan Penny said.
For the quarter, both the goods and services balances lifted.
"From here, we expect the current account deficit to continue to widen as the deficit returns to its pre-pandemic levels," Penny said in a commentary.
Westpac expects it to reach its widest point of around 4.4 per cent of GDP in the second half of 2022, before settling at around 3 per cent of GDP over the long run.