A shrinking economy will translate into each New Zealander losing $52,000 in income over the next five years as the country recovers slowly from recession, an economic think tank says.
New Zealand Institute of Economic Research (NZIER) says per capita income will not recover to pre-recession levels until 2011, meaning each person's income will reduce by $10,500 a year over the next five years.
It predicts the recession will linger until a return to growth in the last three months of this year, led by increased migration and lower interest rates.
The Institute says the road to recovery will be slow, with the economy shrinking 1.4% in the year to March 2010, followed by growth of 3.5% over the next five years.
While the NZIER says strong immigration will play a role in the recovery, it expects unemployment to keep rising through 2009 and 2010, before peaking at 7.8% of the workforce in the middle of 2011.