Good news and bad news is expected by markets this week when New Zealand's current account deficit figures are released on Thursday followed by the gross domestic product data on Friday.
Westpac chief economist Brendan O'Donovan estimated that the current account deficit widened slightly to 8.7% of GDP at the end of last year.
"We think this will mark the peak in the deficit as the global recession forces a correction of some of the long-running imbalances in the New Zealand economy."
For the three months ended December, a 12% fall in the value of the dollar more than offset the weakness in world prices for many of New Zealand's export commodities, leaving export values slightly higher in adjusted terms.
Imports were down in the fourth quarter due to a sharp fall in world oil prices and plunging car imports.
The services balance was expected to head further into the red.
The tourism sector had been hit by a drop in visitor numbers as the global recession deepened and it had yet to see much relief from the weaker currency, as businesses tended to price in New Zealand dollars.
The lower dollar had inflated the cost of imported services, mostly transport and travel.
Mr O'Donovan provided some encouragement in believing the improvement in the deficit this year would accelerate this year as some large quarterly deficits from last year dropped out of the annual calculations.
"We expect the deficit to narrow to 6% of GDP by year-end. A global recession may seem an unlikely catalyst for an improvement in the deficit, given the obvious impact on demand and prices for our exports. But this is only a part of the story."
A current account deficit ultimately reflected a country's willingness to live beyond its current means.
For most of the decade, strong global growth and easy access to credit encouraged New Zealanders to borrow and spend, he said.
In the current "more chastened times", consumers and businesses were scaling back their spending ambitions relative to their income and the deficit would naturally correct.
History showed the adjustment could be dramatic.
In the early 1990s recession, the deficit narrowed from 4.1% to 2.7% of GDP as import demand sagged.
During the Asian crisis in 1997-98, the deficit narrowed from 6.7% to 3.9% as a sharp fall in interest rates reduced the outflow of interest payments.
The dot.com collapse in 2000-01 saw the deficit shrink from 6.4% to 2.8% as the dollar fell to record lows, driving a substantial improvement in the trade balance.
"It's worth considering that in the current recession, all three of these drivers have been put into play."
GDP data out on Thursday was likely to confirm that New Zealand had been in recession for 12 months.
Mr O'Donovan was expecting GDP to have fallen by 1.1% in December, completing four consecutive quarterly declines in economic activity.
"The horrible headline GDP figures will be backed up by equally awful details. For the second consecutive quarter, consumers spent less, businesses invested less and we sold less to the rest of the world."
Demand was weak right across the private sector.
Growth bright spots appeared to be limited to more government spending and agriculture as recovery from last summer's drought continued.
Even the 1% lift pencilled in for agriculture was not a given with the risk that fewer lambs outweighed increased milk flow.
"The economic vibe has moved on considerably since the end of last year, continuing the rapidly changing landscape in recent times.
"A hint at the speed of the change can be gleaned from the outlook for world growth being slashed by 2.4% in the space of six months - a truly remarkable statistic but a sign of the times."
