Weaker economic growth a `year of pain'

Opposition parties are warning 2013 will be "a year of pain" after Treasury forecasts of weaker economic growth.

The half-year economic and fiscal update, released on Tuesday, shows the economy growing by 2.3 per cent in 2012/13 compared with the May budget's forecast of 2.6 per cent.

Growth in 2013/14 is forecast at 2.9 per cent, slightly up on the budget's 2.4 per cent, and in 2014/15 it is forecast at 2.5 per cent, slightly lower than the expected 3.1 per cent.

The government expects to post of $66 million budget surplus in 2014/15, down from the forecast $197m.

NZ First leader Winston Peters says the Treasury is painting a bleak picture of an economy floundering under a high exchange rate.

"These forecasts should be taken as a warning to New Zealanders that National intends 2013 will be a year of pain," he said.

"Behind the pretence that it can create a surplus by 2015 sits the uncomfortable truth that ordinary New Zealanders will be the ones who pay the price."

Labour leader David Shearer says the government won't give up on its target of a surplus in 2014/15 and will do anything to get there.

"We are losing jobs because our exporters are struggling and as a country we're spending much more than we're earning," he said.

"National is refusing to change outdated economic policy."

Green Party co-leader Metiria Turei says the government is meeting its own low performance benchmarks.

"By nearly all measures of traditional economic success New Zealand has performed relatively poorly when compared with the rest of the OECD," she said.

Finance Minister Bill English says the government's plan to deliver a faster growing economy, more jobs and a return to surplus is on track.

"After 2014/15 surpluses are forecast to increase and debt is forecast to fall," he said.

"Despite our growth forecasts being slightly weaker than in budget 2012, New Zealand is expected to grow more strongly over the next four years than the Euro area, the United Kingdom, Japan and Canada."

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