The Treasury says economic growth may be weaker than expected in the second half of this year because of the Canterbury earthquake and a slowing global recovery.
The Government's economic advisor says it's uncertain whether growth in the second half will be stronger than the average quarterly growth of 0.7% it predicted in May's budget.
The economy grew a modest 0.2% in the June quarter.
The Treasury says firms report a weak recovery in sales and profits, while investment has stalled.
Most businesses say wage rises are limited, and many plan to initially absorb the GST hike.
