Forecasts show gradual recovery
The economy is recovering gradually, according to the latest NZIER Consensus Forecasts, with growth expected to average 2.3 per cent over the next three March years.
The Consensus Forecasts are an average from a survey of financial and economic agencies, not the NZIER's own forecasts.
For the March 2013 year, growth was expected to be 2.3 per cent, trimmed slightly from the last consensus forecasts. Growth in the following March year would be 2.8 per cent, also slightly down on the previous survey.
The Canterbury rebuild was expected to be a key driver of growth in coming years, although it would be more protracted than earlier expected.
The job market was getting softer, with unemployment recently rising to 7.3 per cent.
Forecasts are for slow job growth and unemployment to stay higher for longer. Real wage growth would remain subdued.
The "grinding recovery" meant inflation would remain low, and the official cash rate would be lower for longer, with a gradual rate rise from late 2013.
Meanwhile, BNZ said the economic outlook for next year was "singularly unspectacular" with modest growth expected in the wake of the latest service sector and manufacturing surveys.
The service sector is still expanding, according to a survey out yesterday, but has slowed from a jog to a walk in November.
The seasonally adjusted BNZ-Business NZ Performance of Service Index stood at 54.1 in November, down 4 points from October's strong result.
An index above 50 points indicates service sector activity is expanding and below 50 that it is going backwards.
BNZ is forecasting growth to average 2.3 per cent next year but said modest growth was not a bad place to be in a global backdrop of "significant distress".
But even that solid growth was heavily dependent on a big lift in construction work.