Bumpy and subdued recovery - NZIER

The economic recovery will be bumpy and subdued, The New Zealand Institute of Economic Research (NZIER) said.

NZIER is predicting economic growth of 2.7 per cent in 2010 and 1.4 per cent in 2011 calendar years in its quarterly predictions.

"The recession is over, but the recovery will be jagged. Some economic indicators - domestically and internationally - are ringing alarm bells," principal economist Shamubeel Eaqub said.

"Some housing indicators have suddenly plunged and internationally some confidence and housing figures have also shown renewed weakness," he said.

He also cited uncertainty about regulation and tax as issues.

NZIER expects the Reserve Bank of New Zealand to raise interest rates in the September quarter.

It expects the unemployment rate to peak around 7.5 per cent, similar to the 7.3 per cent rate in December 2009.

Wage restraint was likely to continue for another one or two years.

- NZPA