An economic forecaster says the patchy economic recovery is set to continue and growth will be slow for the next two to three years.
The Institute of Economic Research's latest quarterly prediction is predicting 1.8% growth this year, slightly stronger compared with its previous report, and 2.1% next year, slightly slower than its earlier forecast.
NZIER principal economist Shamubeel Eaqub says the slowdown in Australia continues to have a major impact on New Zealand.
"Australia is our closest trading partner and a very, very important country for New Zealand. About a fifth of our exports go there and in the last six to seven months exports to Australia have really come off in quite a sharp way."
Mr Eaqub says that has implications particularly for manufacturers that are are focused on Australia.
He says the weakness in the Australian economy is having quite a big impact on New Zealand and if it continues could slow New Zealand's economy further.