Uncertainties lower forecasts for Kiwi economic growth

New Zealand's economic growth is forecast to slow over the next two years, an independent economic think tank said Monday.

Forecasters had weakened expectations over the first quarter this year, but growth was still expected to be fairly solid out to 2018, according to the New Zealand Institute of Economic Research.

The NZIER Consensus Forecasts, an average of forecasts compiled from a survey of financial and economic agencies, said forecasters expected gross domestic product (GDP) growth of 3.3 percent in the year ending March, when the government statistics agency announces the figure on June 18.

However, that would moderate to 2.8 percent and 2.7 percent in the following two years.

Economic activity indicators over the past quarter had been mixed, with global dairy prices continuing to fall, but household spending remaining strong, said a statement from NZIER.

Home construction, a key contributor to GDP growth over 2014, was expected to remain strong as the Canterbury earthquake reconstruction wound down, and construction in the largest city of Auckland ramped up.

Forecasts on export volume growth were mixed, with average expectations that export growth would pick up over 2016, but some expected very weak export growth over the next year.

Slowing activity in key trading partners was a risk to the export outlook.

Forecasters expected the unemployment rate to ease from 5.8 percent now to around 5 percent in 2017.

Consumer price inflation had been surprisingly weak over the past year, reflecting sharp falls in petrol prices and subdued domestic inflation pressures, but it was expected to rebound to about 2 percent later in 2017. Endi