Most economists are expecting better growth next year as earthquake-damaged Canterbury is rebuilt, but most can't rule out New Zealand returning to recession.
The economy contracted by .2% in the three months to September, after growth of only .1% in the previous quarter.
The decline was mainly due to further falls in manufacturing activity, as well as a slowdown in the fishing, forestry and mining sectors, and in construction.
The Institute of Economic Research's principal economist, Shamubeel Eaqub, says what recovery there has been is very shallow, and people aren't feeling much better or confident about their jobs or wages.
A 'ball-and-chain' recovery
Goldman Sachs economist Philip Borkin says the wheels have fallen off the recovery, and another recession can't be ruled out.
There's a risk activity will remain weak, Mr Borkin says, notwithstanding the rebound associated with quake-related construction. "It's likely to be a bit of a slow grind across a number of sectors," he says. "We call it more of a ball-and-chain recovery."
Mr Borkin says the weak GDP result will keep the Reserve Bank on the sidelines for much of next year, and interest rates are unlikely to rise before September.
