RTTNews - New Zealand's economy is expected to grow in the December quarter, led by migration induced population growth and traction from considerable stimulus in the economy, the New Zealand Institute of Economic Research or NZIER said Wednesday. That implies that the recession that began in early 2008 is likely to continue through to the September quarter of 2009.

In its June 2009 edition of quarterly predictions, the NZIER said it expects the economy to contract 1.4% in the March 2010 year after an estimated 2% contraction in the March 2009 year. According to the think tank, this will be followed by a recovery averaging 3.5% over the following five years.

Despite our forecast of a seemingly strong recovery, the impact of the recession will take some time to unwind, NZIER principal economist Shamubeel Eaqub said.

Moreover, the June predictions showed that the economic environment will be difficult for businesses and profitability is likely to remain a challenge given subdued demand and reduced pricing power. Rising unemployment will persist until mid 2011, when the unemployment rate is likely to peak at 7.8%. A weak labor market and lagged effects of the recession could suppress wage growth for some time, NZIER added.

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