There has also been a strong cyclical recovery in investment spending after the 1991 recession. Strong investment spending widens the current account deficit in the short-term, but as long as that investment turns out to be profitable, any foreign capital tapped to finance it - whether in the form of debt, new equity, or retained earnings - will create no problems.
In fact, corporate balance sheets in New Zealand have generally remained healthy after the stresses of the late 1980s and early 1990s. BIS Review 8/1998  -3-  But much of the demand for borrowed funds in recent years has come from the household sector, and has been secured by that favourite New Zealand financial instrument, the house mortgage.