, and the quality of our future macro and micro economic policies, it is unlikely that we will have difficulty in attracting the necessary investment. we compete in a global market to sell our products. equally, we compete in a global market to attract savings for investment. the pool of savings available globally is enormous, and new zealand ’ s needs represent just a minute fraction of that available. new zealand need not, therefore, regard itself as investment constrained. but to the extent that our domestic savings fall short of the levels required to fund our investment needs, our external debt ratios continue to rise, then the risks perceived by potential investors will also rise. with higher risks come increased interest rate margins. it is probably also the case that those high external debt ratios leave new zealand a little more vulnerable to shifts in international market sentiment, which may reveal themselves in sharp and sometimes disruptive movements in interest rates and exchange rates. for those reasons, it is our belief that new zealand would face a more secure future if our dependence on the savings of others were reduced.

4 international monetary fund 5 the april 2017 fiscal monitor estimates south africa ’ s structural budget balance at - 3. 4 % for 2014, - 2. 8 % for 2015 and - 2. 8 % for 2016. since 2009, the structural budget balance has averaged - 3. 5 % of gdp. internal sarb estimates are very similar. 6 this comparison refers to the following countries ( with the average 2010 - 2016 fiscal balances in brackets ) : brazil ( - 5. 1 % ), south africa ( - 3. 9 % ), argentina ( - 3. 6 % ), australia ( - 3. 4 % ), canada ( - 2. 2 % ), colombia ( - 2. 1 % ), new zealand ( - 1. 9 % ), indonesia ( - 1. 8 % ), chile ( - 0. 7 % ) and peru ( 0 % ). specifically, chile recorded budget surpluses in 2011 and 2012, colombia in 2012, and peru in each year from 2010 - 2013. page 4 of 10 more recently, some emerging markets have had space to cut rates. the prevailing pattern has been that the countries that are closer to their inflation targets, and which previously increased rates more, now have greater scope to cut. for instance, inflation in chile has fallen from 5. 7 % at its peak to just 2. 6 %, below the 3 % inflation target, permitting the central bank to reduce rates by 100 basis points. in brazil, inflation has declined from a high of 10. 6 % at the start of 2016 to 4. 1 % in may, and the policy rate has come down from 14. 25 % to 10. 25 %. brazil ’ s inflation target, for your information, is a point of 4. 5 % within a range of 3 - 6 %. in sum, we have run accommodative macroeconomic policies throughout the postcrisis period. since 2014, the degree of stimulus provided by policy has been reduced to contain inflation and slow the pace of debt accumulation. policy nonetheless remains broadly supportive of economic activity. despite this fact, growth has slowed steadily throughout the post - crisis period. to some extent, we have been able to blame this on an unfavourable global economic environment. yet, now the global economy looks as healthy as it has in years – but the south african economy is still struggling. so why are we doing so badly? and what can be done about it? south africa ’