New Zealand’s rising currency could curb exports and delay a recovery from its recession by at least six months, according to the New Zealand Institute of Economic Research Inc. Should the currency weaken, the economy would start expanding in the fourth quarter and growth could accelerate in 2010, the institute said today. “We are assuming the New Zealand dollar remains below trend for the next three years,” Shamubeel Eaqub, principal economist at the institute, said at a briefing in Wellington. Should the dollar stay where it is today or rise, “the recovery gets pushed back by about six to nine months,” he said. New Zealand’s dollar reached an eight-month high of 65.94 U.S. cents today and has gained 14 percent against the U.S. dollar in the past month, the best performing major currency tracked by Bloomberg. Exports make up about 30 percent of the NZ$180 billion ($118 billion) economy. The institute said the economy will contract 1.4 percent in the year ending March 31, 2010 as the worst recession in more than three decades draws to an end. It expects growth of 4.3 percent in the year to March 2011 as the world economy recovers. New Zealand’s economy needs to be more reliant on exports rather than housing and consumer spending, which underpinned growth between 2000 and 2007, Eaqub said. “The currency does need to stay low to give us that impetus to get into that rebalancing mode,” he said. “A higher currency path would clearly make the recession last longer.” New Zealand’s currency broadly follows a four-year cycle from peak to trough and it peaked at 82.13 cents in early 2008, Eaqub said. The institute has assumed the currency will show a “modest depreciation” over the next three years, he said.

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