The New Zealand economy is in transition and an "abnormally long list of turning points" will make forecasting difficult in coming months, says the ANZ economic team in its latest quarterly outlook.
Almost all the key economic drivers "are either navigating a turning point, or are expected to transition through one or more turning points over the next few years", the report says.
These include inflation, interest rates, the housing market, migration and the Covid-19 pandemic itself.
ANZ's latest forecasts include the OCR - expected to hit 3 per cent by April 2023.
House prices are expected to fall, but with a "soft landing".
ANZ expects the REINZ House Price Index to fall 7 per cent across 2022 before returning to moderate growth of 1.8 per cent in 2023.
GDP is forecast to rebound from the Delta lockdown over the fourth quarter, coming in at 5.5 per cent for the full year before settling to steady growth at about 2.4 per cent for 2022 and 2.8 for 2023.
Very strong inflation is expected in the near term, but expected to slow on higher interest rates and the waning impact of pandemic disruption.
Currently sitting at 5.9 per cent for 2021, ANZ expects it to ease slightly over 2022 to an annual rate of 4.1 per cent.
They forecast it to fall back into the Reserve Bank's target range (of 1-3 per cent) averaging 2.7 per cent across 2023.
The team forecasts unemployment to fall from its annual rate of 3.2 per cent in 2021 to 2.9 per cent for 2022.
The report notes that many of the key drivers are related (for example the unwinding of monetary stimulus is contributing to housing market outcomes) but there are also turning points that are unrelated (eg Covid developments).
Issues like migration could have a huge bearing on the outlook but remain highly uncertain.
"The pathway towards reopening our border is something we can at least base on announced policy," the report says.
"This will mark a turning point for the migration cycle and net services exports such as international tourism and education."
But it wasn't yet clear how many Kiwis are waiting to come home, versus waiting to depart New Zealand "once they know the MIQ lottery is no longer a barrier to travel".
"History tells us that a strong Aussie labour market tends to attract a fair few Kiwis, so it's entirely possible the first stages of New Zealand's reopening sees a net migrant outflow."
Another variable was how many non-Kiwis were waiting to migrate to New Zealand to fill labour shortages once border settings permitted.
"There could be a lot, but it's also not clear what the Government's immigration 'rebalance' (announcements expected in April) means for policy settings," the report said.
"Putting it all together, both the supply and demand sides of the economy have either recently transitioned, are transitioning, or expected to transition through numerous and significant turning points."
Forecasting in that environment meant making assumptions about all of these factors (timing, magnitude, and direction).
"It's all but impossible that we've nailed all of them, but the process of creating an internally consistent narrative is still a useful process for thinking in a disciplined manner about the drivers of the economy and what's really going to matter for the outlook over the next couple of years."