AMP Capital predicts unemployment to fall to 5% in the next two years.
It expects the general state of the economy to grow as the housing market recovers and the Canterbury rebuild gets underway.
AMP's chief economist Bevan Graham says New Zealand is likely to find it "hard going" but is holding up relatively well compared with developed nations and the rest of the OECD.
He says New Zealand's export markets are in generally good shape, inflation is benign. the dollar is off its high of nearly 90 cents and banks are in pretty good shape and there is progress on some of the big structural issues such as household debt levels, which are coming down.
He is predicting unemployment to "drift" down to around 5%, when the skills shortage, especially in construction is like to kick in.