New Zealand economy forecast to continue solid growth

New Zealand's economy is expected to continue to grow solidly over the next three years, driven by home building and exports, an independent economic think tank said Monday.

Economic growth was expected to be 3.3 percent in the March 2015 year, before easing to 2.9 percent, 2.8 percent and 2.6 percent in the following three years, according to the New Zealand Institute of Economic Research (NZIER).

The NZIER Consensus Forecasts, an average of forecasts compiled from a survey of financial and economic agencies, said home building was a key contributor to growth in the last year.

Residential construction activity levels would remain high, but the rate of growth would moderate as the rebuild of the earthquake- battered Canterbury region neared completion, although demand in the biggest city of Auckland was still strong, said an NZIER statement.

Improved household incomes and strong net migration were boosting household spending.

Consumer price inflation was expected to drop to an annual rate of 0.5 percent in the March 2015 year, but was expected to lift as capacity pressures emerged and the Reserve Bank of New Zealand would begin gradually raising interest rates from 2017.

Exports would be flat over the March 2015 year, largely reflecting the effects of slowing global demand, but they would lift as the New Zealand dollar fell and the global economy improved.

The New Zealand dollar would remain high in 2015 then gradually ease in the following years, but it was expected to remain at historically high levels.

"There is a wide divergence in views over the labor market," said the statement.

"Most expect continued employment growth to further push down the unemployment rate. However, some expect a sharp lift in the unemployment rate due to strong migration expanding the labor force." Endi