Slowing domestic consumption drags down New Zealand economic forecasts

Forecasts for New Zealand's economic growth have been scaled down as domestic consumption is forecast to ease, an independent economic think-tank said Monday.
The domestic economy will not grow as fast as previously thought, and the outlook for investment had become more cautious, particularly in residential construction, according to the New Zealand Institute of Economic Research (NZIER) Consensus Forecasts, an average of forecasts compiled from a survey of financial and economic agencies.
The economic recovery would peak next year at 3.3 percent growth, and growth will moderate gradually to 3 percent in 2016, 2. 3 percent in 2017 and 2.1 percent in 2018, said the NZIER report.
Growth in household spending, which accounted for 63 percent of gross domestic product, would ease over the coming years, slowing momentum in the economy.
The moderation in spending reflected views of slowing employment growth and steady but muted wage growth over coming years.
Despite recent weakness in global commodity prices, export growth was expected to be strong and offset weakness in the domestic economy, while a gradually depreciating exchange rate would increase export competitiveness and blunt import demand.
Consumer price inflation had been slower than expected in recent months, but the average of economists' forecasts was for inflation of around 2 percent for the foreseeable future, at the middle of the Reserve Bank of New Zealand's target range of 1 percent to 3 percent.
Economists on average still expect a small government fiscal surplus of about 100 million NZ dollars (77.48 million U.S. dollars) in the 2014-2015 fiscal year, rising to 3.9 billion NZ dollars (3.02 billion U.S. dollars) by the 2017-2018 fiscal year.