Another day, another set of economic data confounding traditional expectations of what a downturn looks like.
After years of deficits, New Zealand earned more than it spent in the June quarter, leading to a record current account surplus of half a billion dollars.
New Zealand's seasonally adjusted current account surplus of $0.5 billion in the June 2020 quarter is the biggest in the series since 1971, Stats NZ said today.
That compares with a $1.4b deficit in the March 2020 quarter.
On an annual basis, the deficit narrowed to the lowest it has been in a decade, at 1.09 per cent of GDP.
A current account surplus occurs when New Zealand's earnings from the rest of the world from exports, income on investments and secondary income are larger than our expenses to the rest of the world.
But while current account deficits have been a drain on the economy for many years, this surplus reflects the highly unusual nature of the quarter - both in New Zealand and around the world.
"New Zealand earned more than it spent in transactions with the rest of the world due to a sharp slowdown in international trade because of Covid-19," said Peter Dolan, international statistics senior manager.
"This reflects a slump in demand for oil imports and in spending by international tourists, while dairy exports held up in the June quarter, boosting the current account into the black."
The current account surplus was driven by the goods balance turning from a deficit into a $2.2b surplus.
Exports fell $0.8b in the quarter but imports fell much more, down $3.2b.
"Crude oil imports were much lower than usual from April to June 2020, with much less travel by road and air. Oil imports fell to zero in July, just after the end of the June 2020 quarter.
"With only essential businesses allowed to operate during alert levels 3 and 4, wholesale and manufacturing trade also shrank, reducing the imports required for production and further hitting related suppliers."
But New Zealand's services balance was in deficit for the first time since the September 1998 quarter, reflecting the hit on the tourism sector.
Exports of services were $3.9b in the June 2020 quarter, down $2.5b from the March 2020 quarter.
Travel services were $2b for the quarter, down 48 per cent (or $1.9b), after the border was closed to overseas visitors.
Meanwhile New Zealand's net international liability position was relatively steady - at $180b at June 30, 2020, Stats NZ said.
"Global financial markets saw large changes in valuation, while investment portfolios continued to adjust to the volatility Covid-19 has created," Dolan said.
When compared with the net international liability position at December 31, 2019, before Covid-19 took hold, the net international liability position is $8.9b wider.
"Since the start of 2020, market price changes had the largest impact on the net international liability position.
"Overall, changes in market prices reduced the value of New Zealand assets abroad by $8b, and increased the value of New Zealand liabilities to overseas by $5.6b," Dolan said.
While there were large re-allocations of portfolios from asset types such as equities into cash and deposits in the March 2020 quarter, there were further re allocations returning to a more diversified portfolio in the June 2020 quarter.
There was a net divestment of New Zealand investment abroad of $9.4b in the June 2020 quarter.
While the largest driver of the inflow came from reducing holdings of currency and deposits (other investment), much of this was reinvested in assets like equities and debt securities (portfolio investment).