The outlook for the NZ economy in 2013 and beyond looks brighter than seen thus far in the recovery. Negative international spillovers may gradually diminish as global growth picks up. Construction investment should be supportive, due to Canterbury rebuilding and housing strength more generally. Meanwhile, banks have further strengthened their capital positions, boding well for future stability. Fiscal policy has embarked on a steady tightening path, which is appropriate. With inflation still very low, monetary policymakers can provide short-term support while monitoring risks from high house prices and household debt.