The New Zealand economy is recovering gradually, according to
NZIER consensus forecasts.
Growth will be steady but unspectacular, thanks to a weak
global economy, ongoing deleveraging at home and uncertainty
about the rebuilding of Canterbury.
The forecasts, a consensus from economists at retail and
investment banks, the Treasury and the Reserve Bank, are
compiled by the New Zealand Institute of Economic Research.
Economic growth is expected to be lower than early forecasts
in 2013 at 2.3%, and 2.8% in 2014.
The rebuilding of Canterbury would lift investment, the
consensus found. Forecasters expected the bulk of
reconstruction to happen in 2013-14. But they also expected
rebuilding to take longer. Residential investment growth
would still be 11% in 2015, up 1.5% on the September survey.
''Uncertainty about the timing and size of the rebuild means
there is considerable divergence among forecasts,'' NZIER
The export outlook had softened. Global demand had slowed and
the New Zealand dollar was expected to be higher for longer.
Exports would be affected.
Forecasters agreed that growth would be slower. Over the next
three years, export growth was forecast to average 1.7%, down
from 2.1% in the September survey.
Forecasts revised their expectations of the dollar's value
upwards. On a trade weighted basis, the dollar was expected
to be higher every year through to 2015.
''Exporters should plan for weak demand and a high exchange
rate for some time. A high exchange rate will favour
imports,'' NZIER said.
A slow recovery meant inflation would be low. Consumer price
inflation would remain within the Reserve Bank's 1% to 3%
target band over the next three years.
The 90-day bank bill rate was forecast to increase from an
average of 2.7% in 2013 in 2014 and 3.7% in 2015.
Forecasters expected interest rate increases to start late
next year with smaller increases than previously thought.
That was due to the sluggish recovery and weaker inflation.
There was considerable divergence among forecasters about the
labour market. The consensus expected job growth to be
steady. Unemployment remained high and competition for jobs
was intense, moderating real wage growth.
A slow economy would also reduce tax revenue. Despite
borrowing costs remaining low, the consensus did not expect a
return to fiscal surplus by 2015.