A double dip recession cannot be ruled out, the New Zealand Institute of Economic Research (NZIER) says in its December quarterly predictions report.
"We expect wintry economic conditions this summer," NZIER said in the report which predicts the economy will be weak into early 2011.
"A double dip recession cannot be ruled out but it is not our central scenario. Instead, we expect weak activity over coming months, before a more sustained recovery from mid 2011," principal economist Shamubeel Eaqub said.
"The recovery will be shallow and volatile," he said.
Indicators such as levels of house sales and domestic trading activity measures point to a slow finish to the year, even without the destruction and disruption of the Canterbury earthquake in early September.
The institute forecasts economic growth of 1.7% in 2010, rising to 2.% in 2011 and 2.9% in 2012.
The Canterbury earthquake will weigh on growth in late 2010 but boost growth next year as reconstruction begins and the regional economy reverts to more normal spending patterns.
"Economic activity will be weak through late 2010 and early 201, but we expect a more sustainable and broad based recovery from mid 2011.
"For businesses with tight capacity this is the time to invest; to capitalise on a more sustainable recovery from mid 2011," Mr Eaqub said.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- NZ dollar gains as upbeat data across Asia spurs US dollar selling
- Key leads move against fossil fuel subsidies at Paris climate summit
- Political and economic week ahead: Labour party reshuffle
- Will Hellaby's lumpy contract oil and gas business finally deliver?
- Yoghurt Story promoted products that did not contain yoghurt – ComCom
Most listened to
- Hellaby’s oil & gas services business could deliver this year, says new managing director Alan Clarke
- Hamish McNicol talks about Yoghurt Story
- TrueNet's John Butt on internet speeds
- Snakk Media chief executive Mark Ryan wonders how to "move the needle" on Snakk's share price
- Head-to-head: Federated Farmers director Katie Milne and SAFE executive director Hans kriek debate dairy industry's treatment of bobby calves