Economists more optimistic about NZ growth

Economists are feeling a little more optimistic about the country's fortunes over the next few years than they were three months ago.

Consensus forecasts compiled by the New Zealand Institute of Economic Research (NZIER) show the average forecast for economic growth for the year to March 2011 is now 3.1 per cent, up from an average forecast of 2.8 per cent in December.

For the year to March 2012 the average forecast for GDP increased to 3.2 per cent in the latest consensus, from 3 per cent in December.

But NZIER said the forecast range was wide, from a paltry 1.8 per cent to a flourishing 4.1 per cent.

For the year to March 2010, the consensus was unchanged at a decline of 0.4 per cent, as much of the data had already been released.

On unemployment, the average forecast was for the rate to peak at 7.2 per cent in the March 2010 year, up from 7 per cent in the previous survey.

"A subdued economic recovery means the unemployment rate is expected to remain elevated in the forecast horizon," NZIER said.

The unemployment rate was expected to gradually recede to 6.2 per cent by March 2012, which was still elevated compared to levels below 4 per cent through much of the period between 2005 and 2008. The elevated unemployment rate was expected to cap wage growth.

The export outlook had brightened, in line with a recovering global economy.

Forecasters expected exports to rise by 2.2 per cent in the year to March 2010, up from a forecast of 0.7 per cent three months ago.

In the year to March 2011 the forecast was for a 2.7 per cent rise, up from a forecast of 1.7 per cent in December, while for the March 2012 year the new forecast was for exports to rise 5.1 per cent, up from the previous average of 4.5 per cent.

- NZPA