You are not permitted to download, save or email this image. Visit image gallery to purchase the image.
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 said.
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.