The factors driving that expansion include a robust global economy, gradually increasing household expenditures, improved productivity, stronger exports (partly the result of a lower exchange rate), business investment and an expansionary fiscal policy -- both from increased government spending under the Coalition Agreement and from the tax cuts scheduled for July 1998.
Easier monetary conditions since earlier this year are also supportive of stronger growth. It seems clear that, in the middle of this decade, the New Zealand economy became somewhat over-stretched in terms of its ability to support the pace of spending. It seems equally clear that the economy has entered a period in which there is some spare capacity.