The Government's announcement that it accelerating nearly $500 million of publicly funded building projects is a positive and encouraging step, says Goldman Sachs JBWere economist Shamubeel Eaqub.

Along with the $480m small business tax package announced last week it was a necessary step in the right direction to support the economy, Mr Eaqub said.

"While small in the context of annual GDP ($180 billion) these are positive and encouraging steps to counter the recession and bolster the aggressive easing delivered by the RBNZ to date."

But more needed to be done and the Government had announced further measures would be delivered in the May budget, while the Reserve Bank was expected to continue its aggressive interest rate cuts.

Mr Eaqub, Goldman Sachs JBWere's Australia and New Zealand investment research director, warned that the spectre of a ratings downgrade may hamstring efforts to reflate the economy.

The possibility of a downgrade had been raised by the prospect of rising public sector debt at a time private sector debt was at historical highs.

"The recession is taking a toll on tax revenues and increasing expenditures as automatic stabilisers kick in will likely drag on the fiscal position," he said.

The Reserve Bank's aggressive interest rate easing with more to come, further fiscal stimulus in the May budget, and hopefully soon a normalisation of global credit conditions should slowly lay the foundation for a recovery into 2010.

"The economic outlook remains uncertain but it is encouraging to see active efforts by the Government to support the economy," Mr Eaqub said.