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THE New Zealand economy remains strong compared with its trading partners but the roaring domestic economy will begin to weaken over coming quarters, senior economists say.
A September quarter forecast from the New Zealand Institute of Economic Research (NZIER) shows how strong migration-fuelled domestic demand has sustained New Zealand through the worst international recession in 10 years.
Consumer confidence was still high, suggesting consumption had continued through to the September quarter, the institute said. Gross domestic product (GDP) was forecast to grow 2.8 per cent in 2002-03.
However, domestic demand was not expected to offset falling export revenue forever. Export volumes were still up because production responded slowly to prices, but the value of exports would be nearly $2.5 billion lower in 2002-03 than it was the previous year.
In coming quarters, the institute is expecting job growth to ease and wages to grow more slowly.
However, softer consumption was expected to lift again late in the 2003-04 year as the value of exports rose in response to an improving global economy.
That export growth would make the economy expand 2.4 per cent in 2003-04, and 2.7 per cent the following year, the NZIER said.
All up, the institute is predicting "a relatively flat cycle" of just under 3 per cent growth over the forecast period to 2007.