That means together exports and investment need to grow by at least about 4 per cent after taking into account their import content. In the past year, net exports and investment made no contribution to growth. Conditions are propitious for business investment to accelerate. Corporate balance sheets are exceptionally strong, and corporate borrowing rates remain very low, even if they are off their troughs.
But investment is unlikely to accelerate until businesses are confident that demand is picking up. The key is exports. As firms see their order books filling up, they will unlock their investment plans. The typical lag between a pick up in exports and an acceleration in investment is about six months. So the crucial question is: What are the prospects for our exports?