Over half of New Zealand's foreign borrowings are sitting on banks' balance sheets, with New Zealand's private sector relative indebtedness the highest in the OECD.1 What's more, our banking sector displays amongst the highest levels of foreign ownership in the world - foreign banks own 98 per cent of New Zealand banking system assets, with 85 per cent being Australian-owned.
Consumption growth in the euro area should also contribute to economic growth, in line with developments in real disposable income, as continued employment growth provides supportive conditions. That said, in view of the potential impact of prolonged financial market volatility and the re-pricing of risk on the real economy, the level of uncertainty surrounding this broadly favourable outlook for economic activity remains high.