Official figures out today are expected to show the economy shrank in the June quarter, confirming a recession, and the consensus among economists is that it has continued to contract in the September quarter as well.
The New Zealand Institute of Economic Research's quarterly survey of forecasters foundthey expect gross domestic product to decline 0.1 per cent in the September quarter, on top of falls of 0.3 per cent in March and June.
The Reserve Bank takes a gloomier view, forecasting another 0.3 per cent contraction in the September quarter, while the Treasury has said it is "not ruling out a further small fall".
The NZIER survey represents a marked deterioration from the consensus three months ago. Then economists were expecting the economy to grow 1 per cent over the year to March 2009. Now that has been shaved back to just 0.2 per cent, which would be the weakest annual growth for 16 years.
Private consumption, which represents about 60 per cent of economic activity, is expected to fall by 0.1 per cent in the current March year before staging a feeble recovery to 1.5 per cent growth in the year to March 2010. Last year it was 3.3 per cent.
Public consumption, on the other hand, is expected to grow by a brisk 4 per cent over the current year.
Residential construction is forecast to shrink by 14 per cent on an annual basis, a drop last seen in 2001 and during the 1998 recession. Reflecting a worsening international outlook, exports are expected to grow only 0.7 per cent in real terms, less than half the rate forecast three months ago. The feeble growth outlook is expected to take the heat out of inflation - eventually.
Unemployment is expected to rise to 4.4 per cent by March next year.
