Economists expect interest rates to stay low until late 2013 and exchange rates for the New Zealand dollar to remain high for longer as the economy grows at a sluggish pace.
They believe the Government's books will not return to surplus by 2014-15 as planned because the subdued recovery will reduce expected tax revenue.
New Zealand Institute of Economic Research's (NZIER) consensus forecasts show the economy is expected to expand on average by 2.4% for the year to March 2013, up from 2.2% in its June survey.
But economists have trimmed the growth outlook for the year to March 2014 from 3.1% to 2.9%.
Factors for slow growth include the delayed rebuilding of earthquake-hit Canterbury, rising global risks and the impact of the high dollar exchange rate on export sales and earnings.
NZIER chief economist Shamubeel Eaqub says the Canterbury rebuild is a major growth driver, but there are many uncertainties.
"We still don't know whether the old industries will return to Canterbury, whether the economy will regain the vibrancy it had before the earthquakes.
"A lot of the growth and the activity in the economy in Canterbury is going to be around construction , which is very narrow and very focused."
Mr Eaqub would like to see the regional economy get back to its old composition, involving tourism and retail.
The persistently high New Zealand dollar has prompted calls for the Government and the Reserve Bank to intervene to bring it down.
JB Were says the central bank should be very worried about financial stability in the economy and should lean against the currency by using a blend of creative credit easing and exchange rate intervention.
But Mr Eaqub says it is a vote of confidence in the strength of the economy.
Mr Eaqub says Australia's slowdown will affect New Zealand and if the situation deteriorates, the Reserve Bank will further cut interest rates.
The NZIER's survey of 10 investment and trading banks, the Reserve Bank, the Treasury, and the institute itself reflects a picture of gradual recovery and moderate improvement in wages.
