The sluggish pace of the economy's recovery is a necessary part of putting household and government finances back in order after the country's excessive borrowing in previous decades, the New Zealand Institute of Economic Research says.

In its latest quarterly forecasts it remains more gloomy than the consensus about the outlook, picking just 1.5 per cent growth in gross domestic product this year and 2.4 per cent next year as the rebuild in Canterbury ramps up.

The consensus forecasts are 2.4 per cent this year and 3.3 per cent next year.

"The global picture remains dark," NZIER principal economist Shamubeel Eaqub said.


Greece still appeared insolvent but the European Central Bank's move late last year to make nearly half a trillion euros of cheap three-year money available to banks made another global financial crisis less likely.

"A greater risk to our exports is a slowing Australian economy, especially where New Zealand has its key business connections - New South Wales and Victoria," he said.

And rising crude oil prices were an emerging risk which could derail the fragile recovery at home and compound weakness abroad.

On the home front the most encouraging leading indicator was a pick-up in business borrowing. Much of it was to the insurance sector to deal with timing issues around Canterbury payments.

"But growth in lending to the food manufacturing and communications sectors suggests a genuine improvement in borrowing and investment," he said.

Rising house sales was another positive sign, though the level was still low. "The most disappointing indicator has been the continued outflow of migrants."

The labour market remained soft, Eaqub said. "There have been barely any new jobs relative to the population since the recession.

"The unemployed are competing for a small number of vacancies. While skilled labour is less easy to find, this is consistent with only modest growth in wages over the year ahead."