4 Jul 2011

Economists predict modest economic growth

8:00 am on 4 July 2011

Economists are expecting modest economic growth in the first three months of the year to be revealed in official figures released on Thursday.

A Reuters news agency poll shows commentators are picking on average 0.4% for the quarter and 1.2% on an annual basis.

And ASB Bank chief economist Nick Tuffley says growth is predicted to be slightly stronger in the June quarter, thanks partly to a recovery following February's devastating earthquake in Christchurch.

He says housing has been recovering in many parts of the country and retail spending has lifted around the country.

But Mr Tuffley says in Auckland and Waikato the market is more positive, with a stronger housing market and retail spending.

He says in Waikato it could be a sign that farmers are starting to spend some of their strong income gains.

Mr Tuffley says there is still a fair amount of caution in the rural sector, though it's expected income for rural sector will be positive over the next year.

The Reserve Bank has signalled it will lift the Official Cash Rate in December, but Mr Tuffley believes the timing and pace of Christchurch's reconstruction will delay the first increase until January.