Key Points:

The current account deficit - the gap between what the country spends and what it earns overseas - grew in the three months to the end of September, highlighting New Zealand's vulnerability to the global credit crunch.

The $6 billion deficit for the quarter pushed the annual deficit to $15.5 billion from $15 billion.

Measured against the size of the economy, it is 8.6 per cent of gross domestic product.

The ratio has been higher, but not often and not by much. It hit 9.3 per cent of GDP in March 2006.

The deficit has increased over the past two quarters, despite very favourable terms of trade - export prices relative to import prices - and the recession reducing demand for imports.

The deficit means foreign claims on the economy exceed New Zealand investment abroad by $166 billion or 92 per cent of GDP, a very high level by international standards.

The bulk of that - $154 billion - is debt. Much of it is short term, which is problematic when wholesale credit markets overseas are not functioning smoothly.

Most of the accumulated current account deficit of the past decade came from banks borrowing more overseas.

But the latest quarter shows a shift from the private to the public sector.

The inflow of capital to fund the deficit came largely ($5.5 billion) from a divestment of foreign exchange reserves held by the Reserve Bank and the Treasury.

ANZ National Bank economist Philip Borkin said funding the deficit that way could not continue, and highlighted the vulnerability of the economy.

"A ballooning current account deficit means we are spending much more than we save as a nation."

That was not an issue when credit was cheap and abundant, but now it is neither.

Bringing a current account deficit down usually required a period of weak economic activity and a lower currency.

Both of those were happening, Mr Borkin said, but there was some way to go yet.

Trade in goods showed a $900 million deficit, seasonally adjusted, down from $1.1 billion in June as growth in exports outstripped growth in imports.

But the export income boost came from higher prices, and export commodity prices have fallen sharply over the past four months.

The investment income balance was a deficit of $3.2 billion, $400 million lower than in the June quarter, reflecting lower earnings to foreign investors from their holdings in New Zealand companies.

In the year to September, foreign-controlled companies in New Zealand made $7.1 billion in profits - all of which, plus $300 million more, was sent overseas as dividends.

* The numbers

$6 billion: Deficit for three months to September.

$15.5 billion: Annual deficit.

$7.1 billion: Profits of foreign-controlled companies in New Zealand.