After 18 months of local recession and almost a year of global economic turmoil many commentators and analysts are now suggesting we are on the road to recovery.
Sharemarkets have rallied, dairy prices have lifted, local house prices have stabilised and the IMF has revised its forecast for global growth for 2010 upwards from 1.9% to 2.5%.
These signs are positive and are in line with what the Government has been saying for quite some time - that we will see the early signs of a recovery in the latter part of this year.
But regardless of exactly when the recovery begins, it won't be cause for immediate celebration.
Earlier this month, I spoke to several financial analysts and investors in Japan and the United States.
While they were of the view that the worst was over, few were confident of a sustained global economic pickup any time soon.
Clearly, as the storm clouds lift, there is a remaining threat of showers and the potential for headwinds.
Locally, the first reason to temper celebrations is unemployment.
For ordinary New Zealanders, the most important measure of a recession is not GDP growth, but whether they have a job.
Unfortunately unemployment, which tends to lag behind other economic indicators, will continue rising, probably well into next year.
The Government is concerned about the loss of any job - it has a profound effect on workers and their families.
That is why we have put in place a rolling maul of initiatives.
Otago is benefiting from many of these.
About 200 homes have been retro-fitted in the first eight weeks of the Government's home-insulation scheme and hundreds more will be done in the coming months.
In addition, the Government will spend almost $300 million on transport projects in Otago over the next three years.
These initiatives are supporting jobs and cushioning the region from the worst effects of the recession.
The second reason to exercise caution about recent positive news - one that will have a huge impact on the future living standards of New Zealanders - is the shape of the recovery.
We are clear about the kind of recovery we want: one driven by increased productivity, business investment and exports; that creates sustainable jobs and starts narrowing the income gap with our trading partners.
We don't want a repeat of the unbalanced growth we saw in recent years.
That lopsided growth, built on borrowing and spending, left us with a bad hangover - a mountain of debt and large numbers of unsustainable jobs.
A return to that kind of growth could ultimately lead us back to exactly where we are now.
These two issues - jobs and growth - are at the heart of the Government's economic programme.
But before I outline that, it is worth taking a closer look at the causes of the current recession.
Looking back at the data, our economy started to get out of kilter around 2003-04 - and it has since got progressively worse.
The imbalances in our economy are laid bare by two worrying indicators.
First, the tradeables sector - that's exporters or industries competing with imports - has actually been in recession for five years, contracting about 10%.
And, even more staggering, there have been almost no net jobs created in the tradeables side of the economy for the past 10 years.
This is highly relevant to Otago, which depends in large part on primary industry and tourism - both part of the tradeables sector.
By contrast, the non-tradeables sector - domestic industries not competing with exports, including the Government - has grown by 15% in the past five years.
The second symptom of our unbalanced growth is the red ink in the Government's accounts - the result of falling revenue and fast-rising spending put in place by the previous government.
That has led to larger projected deficits than New Zealand faced in the early 1990s - deficits that will take about 10 years to wind back.
In this context, the start of a recovery is positive, but clearly there is still a lot of hard work to do if we want to return to high levels of balanced growth in future years.
There is no single policy that will achieve that.
Instead, there are a large number of things - often unglamorous things - that the Government can do to give businesses the confidence to invest and create jobs.
This Government has already begun that task.
We have identified six policy drivers that will form the core of our economic programme for the next three to five years:Reviewing regulation and red tape.
• Investing in productive infrastructure.
• Delivering better, smarter public services.
• Lifting education and skills.
• Innovation and business assistance.
• Reviewing the tax system.
• However, rebalancing the economy will not be easy.
Already we are seeing some worrying signs.
There have been reports predicting strong housing-price increases over the next three years.
From the Government's point of view, we welcome a stabilisation of the housing market, but a premature housing boom would be unsustainable and it would not be good for the economy or for jobs.
Borrowing against inflated house values to go on a consumer spend-up was one of the underlying causes of our current predicament.
We need a balanced recovery.
That means lifting our exports and growth in those parts of the economy that are internationally competitive.
New jobs and, indeed, New Zealand's economic fortunes rest on improving business confidence and investment, not on government or consumer spending.
The Government is aware of these challenges and has a balanced, targeted and effective plan to achieve that.
Bill English is Minister of Finance and Deputy Prime Minister.
