Business and Economic Research Ltd chief economist Ganesh Nana said the global financial crisis was the most frequently used reason to do as little as possible, and that applied to households, businesses and the Government.
"With this lack of direction, it is no surprise that the economy faces a period of muted growth.
"The last few weeks have seen ominous signs, and not just from abroad," Dr Nana said.
Manufacturing indices were in contraction territory, there was a growing migration exodus, worrying indicators Asian markets for forest exports were stalling and clear signs the effect of the PSA virus would hurt kiwifruit exports, he said.
Added to that were weaknesses in the tourism industry and in building and construction, including a low in activity and a stalling in areas such as the ultra-fast broadband initiative.
"It doesn't take much to see that all is not well in New Zealand Inc."
Given the context, it was disheartening to see the Government continuing to focus on its budget deficit when far more pressing matters required attention, Dr Nana said.
In particular, the health of the export sector was not promising.
While dairy exports continued to impress, the fortunes and future of other large and productive export drivers such as forestry, kiwifruit, wine, metal and machinery equipment, meat, tourism and education looked precarious.
It was sobering to see the Reserve Bank slash its export volume forecasts for the 2012 March year from 3.9% three months ago to only 2.7% in its December monetary policy statement, he said.
Even more concerning was the 1.5% export growth expected in the March 2013 year and another 2.8% expansion forecast for the March 2014 year.
Coupled with the 1.7% growth recorded for the March 2011 year, the forecast picture would yield four consecutive years of sub-3% annual growth for exports.
"For a country with significant national debt issues, that have been cited by credit rating agencies as reasons for contemplating downgrades, the strategy to address this imbalance appears not to include the option of searching for increased export income," Dr Nana said.
There seemed little scope for further relaxing monetary policy, and the prospects for New Zealand expanding its way out of the national imbalance seemed remote.
The strategy appeared to be one of the Government spending less and registering government surplus by 2014.
However, even the official forecasts continued to confirm an expectation of a deteriorating national imbalance. The strategy was curious, he said.
There remained only one source providing impetus to the economic activity on the forecast horizon - the rebuilding of Christchurch.
Residential building investment was a major contributor, but from an extremely low base of about 13,000 consents a year currently to about 20,000 by the March 2014 year.
While demand was undoubtedly present for new house construction, restraining influences remained around uncertainty and its effect on confidence, along with limited capacity in the building and construction industry, Dr Nana said.
Capacity issues in building and construction were unlikely to be eased in the near future as the migration exodus gathered momentum.
The global situation remained fragile, with both the OECD and IMF progressively revising down their global growth forecasts, he said.
The financial crises in Europe and the US were now affecting Asian growth prospects as Southeast Asian countries saw export demand from European markets stall, he said.
"It is increasingly clear to all - except those who refuse to see - that the European debt crisis is much more deep-seated and fundamental than can be rectified via the odd bail-out.
"Critical in any long-term solution to the crisis is whether there is a serious political commitment to a united economic union in Europe."
Such a commitment necessarily required significant changes in the attitudes of leadership as well as political and economic structures.
With Germany, France and the UK looking to primarily protect their own interests, the seemingly endless meetings and deliberations were set to continue, Dr Nana said.
The consequence of the impasse was the continuation of heightened uncertainty, reflected in extreme short-term volatility in currency and sharemarkets, with the risk that financial flows necessary for economic trade and activity became even more tenuous.
"Hang on for the ride," he said.
