Your analysis rightly shows exactly what is happening. We are working out at the gym and on a crash diet at the same time.
As you point out the domestic sector is contracting very very rapidly, while the tradable sector tries to maintain output. High interest rates keep the economy short of capital (protein) effectively limiting investment to current account spending (energy bars).
Given however that we have no domestic savings and have been chomping on eurodollar bonds like chocolates (buying real estate with them) we do need to shed some private sector debt (flab).
Its the difference between being ruled by the fat lady and the string bean. Of course its interesting that all Scoop's competitors are hugely wed to the real estate market which should in theory result in much whingeing from those publishers.
The interesting thing is that aside from (predictably) Liberty Press and (just plain sore) TVNZ that hasn't been happening.
Either your print competitors have concluded that they should suffer for the good of the nation or there really is a free press in New Zealand. Not always a very bright press but certainly a free one.