A consensus of the latest forecasts by leading New Zealand economists confirms that GDP is expected to be weaker across the next two years as export earnings peak and investment slows.
The NZIER's consensus survey compiles latest forecasts from Treasury, The Reserve Bank, BNZ, ANZ, ASB, Westpac and NZIER.
The June survey shows the outlook for economic growth trending down slightly with GDP growth at 2.9 and 3.2 per cent through 2019 and 2020 - as opposed to the consensus of 3.1 and 3.3 per cent in the March survey.
NZIER principal economists Christina Leung said weaker forecasts for exports had driven much of the downward revision.
The Mycoplasma bovis outbreak is expected to reduce dairy production in the short term, although a bounce back is expected from 2020.
If there is a bright spot in the outlook it is that unemployment is expected to stay low, improving slightly from the current level at 4.4 per cent to 4.2 per cent across the next three years - a slight improvement on the March consensus.
That should help lift wage growth which is forecast to rise to a peak of 3.6 per cent in 2019 and remain above 3 per cent through to 2021.
That represents a lift from the March consensus which had wage growth peaking at 3 per cent and falling back to 2.9 by 2021.
Meanwhile the inflation outlook remains largely unchanged with the consumer price index inflation expected to rise to 1.9 per cent (from 1.1 per cent) by 2021.
"Rising oil prices have pushed up the cost of petrol but there remains little sign of broadening inflation pressures, "Leung said. "Retailers continue to face margin compression as they struggle to pass on higher costs in the form of price increases."
The outlook for the Kiwi dollar has also weakened. Rising US interest rates were expected to put downward pressure on the Kiwi.