Finance Minister Bill English is cautious about an upbeat economic forecast which suggests New Zealand will spend its way out of recession next year.
The New Zealand Institute of Economic Research forecast differs from gloomier predictions, including from the OECD which believes the economy will remain in recession for another 12 months.
The Treasury has also warned its update before Christmas will be much more pessimistic than its pre-election economic and fiscal update.
Mr English said it was interesting to hear a more positive view amid a glut of gloomy forecasts, but he is not confident that the New Zealand economy will pick up as quickly as the institute suggests.
"We remain hopeful that the recession won't go on forever and won't be too deep. The NZIER have quite a positive view about that compared to everybody else. Lets hope they're right."
However, Mr English says many households need to pay back debt rather than spend.
Labour finance spokesperson David Cunliffe is more pessimistic, saying it is unlikely consumer spending will rebound strongly next year.
"Most households have been spending beyond their means on the basis of upward revalutaions of their assets, principally their house values.
"Those have declined signficantly in the past 12 months and most householders that I talk to will be retrenching not spending."
Mr Cunliffe says more needs to be done to help businesses and exporters and questions whether the government's plan to bring forward infrastructure investment is substantial enough to make a difference.
Growth to resume next year - NZIER
Economic forecaster NZIER is picking the current recession is almost over, but warns the country will see a slow recovery due to the effects of the credit squeeze and weaker demand from New Zealand's trading partners.
It forecasts the economy will contract 0.1% in the year to March 2009, compared to its earlier prediction of a 0.5% contraction.
Senior economist Dr Johannah Branson said there will be modest growth of 1.6% for the March 2010 year, doubling to 3.3% the year after.
Dr Branson said economic growth will resume in 2009, with consumer spending leading the recovery, underpinned by lower fuel prices, easing interest rates, upcoming tax cuts and reasonable wage growth.
She said inflation would fall, but remain above the top end of the Reserve Bank's target band of 1% to 3%.
The institute expects the Reserve Bank to cut the Official Cash Rate by up to one percentage point on Thursday, and a total of 1.5 percentage points by late January, which would take the benchmark interest rate to 5%.
