Senior economist and head of membership services for the New Zealand Institute of Economic Research, Christina Leung, said New Zealand's economic activity had picked up during the second half of 2015, reflecting growth in the non-dairy sectors.
‘‘We expect annual gross domestic product (GDP) growth to recover to about 3% over 2016, and average 2.5% for the following years,'' she said in a statement.
However, global volatility and the likelihood that the United States Federal Reserve will begin raising its official cash rate from almost 0% has to be taken into account.
Westpac senior economist Dominick Stephens said the economy was ‘‘humming along nicely'', and had also revised GDP growth upwards.
He noted ‘‘impressive growth'' in tourism and Auckland construction, but the economy's present wellbeing was ‘‘mainly'' because New Zealand ‘‘dodged the feared El Nino drought''.
‘‘Overall confidence has held up better than anticipated, perhaps aided by low interest rates, cheap petrol and strong population growth,'' Mr Stephens said in the bank's February economic overview.
Earlier this week Statistics New Zealand (SNZ) reported the country earned $2.5billion more from exports than was spent on imports, for the year ended December, following a boost from tourism and the meat sector.
Total exports of goods and services were $69.3billion for 2015, while imports totalled $66.9billion.
SNZ's international statistics senior manager Jason Attewell said: ‘‘Although dairy exports were lower across the year, it has remained our top export earner.
‘‘However, earnings from other export industries and markets have increased in significance, picking up the shortfall in dairy,'' he said.
Spending on personal travel by Chinese visitors has increased $1.4billion since 2011, reaching $2.2billion in 2015, while Australian visitors spent $1.9billion on personal travel in 2015.
Ms Leung said the current volatility in global financial markets was a reminder of how quickly sentiment can change.
‘‘Financial markets are adjusting to the realisation that the Federal Reserve will gradually normalise interest rates in the world's largest economy.
‘‘This has raised fears about the durability of the recovery in the global economy,'' she said.
Despite the pick-up in economic activity, inflation in New Zealand remained very weak, with lower petrol prices playing a key role. The lower petrol prices have also helped reduce costs, with households having an extra $200 per year to spend and businesses also encouraged spending.
The low inflation rate was putting the Reserve Bank in a ‘‘difficult position'' and it was becoming increasingly mindful of the consequences of excessively loose monetary policy on asset prices and financial stability.
‘‘The very low inflation environment contrasts with continued strength in asset prices, particularly in the housing market,'' Ms Leung said.
The support factors for growth in New Zealand's economy remain intact, but the offshore volatility presents negative risks.
‘‘Balancing all these factors, we expect the Reserve Bank will leave the official cash rate on hold at 2.5% over 2016 and much of 2017,'' she said.
Total exports rose $1.9billion from 2014, driven by a $2.3billion rise in spending by international visitors and a $895million increase in 2015 meat products exports. Dairy exports fell by $3billion in the latest year.
SNZ 's Mr Attewell said the growth in earnings from meat and travel was driven by New Zealand's key export markets, including China, the United States, and the European Union (EU).
