NZ economic growth may pick up: survey

Reserve Bank Governor Alan Bollard. Photo / Mark Mitchell

Some 78 economists and strategists surveyed by the Reserve Bank are slightly more optimistic about the country's forecast growth.

Respondents to the RBNZ survey of expectations are picking the economy to grow 2.5 per cent over the 2011 calendar year, that's 0.2 per centage points more than the annual forecast in the September quarter survey.

Economists are predicting 0.4 per cent growth in the 2010 September quarter, half of the central bank's forecast in its latest monetary policy statement, and 0.6 per cent expansion in the December quarter, 20 basis points more than the RBNZ estimate.

Annual inflation expectations were muted, with year-ahead forecasts falling half a percentage point to 3.4 per cent, and two-year-ahead estimates steady at 2.6 per cent.

That's faster than the central bank's 2.2 per cent prediction.

Fewer respondents expect the consumer price index will climb above 5 per cent than the September survey after government officials flagged a likely spike in inflation after the increase in consumption tax last month.

"We continue to view the assumption contained within the September MPS that two-year-ahead inflation expectations will decline over the coming years - despite the upcoming high headline CPI - as optimistic," said Christina Leung, economist at ASB Institutional.

"We see upside risks to the RBNZ's CPI forecast and expect the RBNZ will become less comfortable with the inflation picture over the coming year."

Economists expect the unemployment rate will decline to 6 per cent by September next year, falling a further 0.4 per centage points the subsequent year.

It is currently at 6.4 per cent.

The next year will be another tough one for workers, who will see their wages continue to lag inflation with earnings growth of at 2.4%, though 2012 will see some of these losses erased as wage growth is forecast to accelerate to 2.9 per cent.

Respondents didn't see much change in the exchange rate, picking the kiwi dollar to trade at 77 US cents at the end of March, and falling to 75 cents by the end of September.

It's projected to hold at 78 Australian cents by the end of September. The kiwi recently traded at 76.99 US cents and 78.02 cents today.