Economic growth to slowly come off boil: NZIER

The economy is expected to expand 3.3 per cent in the year ending March 31, slowing to a 2.9 per cent pace in 2016, 2.8 per cent in 2017 and 2.4 per cent in 2018.

New Zealand economic growth will slow over the next three years, while maintaining a "solid" pace, according to the NZ Institute of Economic Research's consensus forecasts.

The economy is expected to expand 3.3 per cent in the year ending March 31, based on the median in the survey, slowing to a 2.9 per cent pace in 2016, 2.8 per cent in 2017 and 2.4 per cent in 2018.

The consumer price index will probably rise 0.5 per cent in the current March year, accelerating to 1.6 per cent in 2015, 2 per cent in 2017 and 2.1 per cent in 2018.

The survey comes ahead of gross domestic product data for the fourth quarter due on Thursday, which is expected to show a quarterly gain of 0.7 per cent for an annual 3.2 per cent.

That would mark a decline from the third quarter's 1 per cent expansion, which some economists say was exaggerated by a jump in mining activity and dairy production.

The local economy has benefited from migration-fuelled population growth, an improving labour market and low borrowing costs, while consumers are also benefiting from lower fuel costs.

Households are also feeling wealthier as property values rise.

More muted recent data, including core manufacturing and wholesale trade, has taken a small amount of shine off though.

"Q4 growth will continue to be largely led by domestic forces, with strong population growth, low interest rates and healthy household confidence boosting demand," economists at ASB said in a preview of the GDP data.

"We expect these areas to remain key drivers of growth over 2015."

The NZIER survey has employment growing at 2.9 per cent in the year ending March 31, slowing to 2.1 per cent next year and 1.4 per cent in 2017.

The jobless rate may be 5.5 per cent in the current year, falling to 5.4 per cent in 2016 and 5 per cent in 2017, the survey shows.

Private sector average hourly earnings are seen rising 3 per cent this year, 3.3 per cent in 2016 and 3.4 per cent in 2017.

In covering comments for the survey, NZIER said the slight cooling in the pace of economic growth may reflect residential housing activity, which has been a strong contributor to GDP because of home-building demand in Canterbury and Auckland.

"As the rebuild in Canterbury nears completion there will be some moderation in residential construction growth," it said.

Household spending was likely to remain "solid" although it may moderate "reflecting some degree of household caution," NZIER said, citing the survey results.

The exchange rate was expected to remain elevated through 2015, before gradually easing in following years, while interest rates are seen gradually lifting.

The 90-day bank bill rate is expected to have averaged 3.6 per cent in the year ending March 31, rising to 3.7 per cent in 2016 and 4 per cent in 2017.

That contrasts with the Reserve Bank's projection's in last week's monetary policy statement, which was for 90-day bank bills to remain unchanged at 3.7 per cent through 2017.