And although our fiscal positions are favourable relative to many other advanced economies, the debt overhangs, dependence on offshore funding and its sensitivity to sustainability concerns suggest that the current tilt of fiscal policy towards consolidation may persist for a while. Moreover, the pressure of the high nominal exchange rate is not the only relevant “headwind” for our economies.
Sectors other than those directly exposed to resources are seeing their relative productivity and cost-competitiveness decline. This reflects the ongoing and rapid industrialisation of Asia, and perhaps globalisation more generally. In New Zealand, the most obvious relative decline is in import-substituting sectors. Research and analysis The crisis has re-oriented the economic research agenda.