The New Zealand Institute of Economic Research is picking the recession could last as long as a year.
Quarterly business confidence survey rebounded in the September quarter, buoyed by the prospect of falling interest rates and a lower New Zealand dollar.
However, anxiety remains, with a net number of firms still expecting higher costs and lower profits.
The institute says the September survey responses captured some but not all of the turmoil on the financial markets.
A senior fellow at the Institute, John Yeabsley, says the economy is likely to decline until December but a rebound in 2009 is possible.
Gross Domestic Product fell by 0.3% in the March quarter and 0.2% in the June quarter. The recession is the first since 1997-98 which lasted three quarters.
