Some of the factors which have lifted our growth rate recently, especially the impacts from  2  BIS Review 6/2005  policy reforms, can be expected to persist, thus improving the economy’s productive capacity or potential output in the long run.
However, there are signs that the level of economic activity is currently higher than the level of potential output, thus giving rise to inflation risks. The capacity utilisation measure from NZIER’s quarterly survey of business opinion is at a record high level. Clearly many firms are stretched, running at full capacity, or close to it.