Wellington  - New Zealand's economic growth is slowing rapidly, and consumers have virtually stopped additional spending, according to the Institute of Economic Research (NZIER), the country's most respected independent think tank, on Tuesday.

It said the rate of growth in real private consumption, which was 37 per cent in the 12 months ending in March, was forecast to be zero in the current year.

The NZIER said that private consumption expenditures accounted for about 60 per cent of the country's gross domestic product (GDP), so the lack of growth would contribute significantly to the low overall level of economic activity in the 2008-09 fiscal year.

It forecast that the economy would grow by 1.9 per cent in the year to March 2009, down from 2.9 per cent in 2007-08 and well below the 3.4-per-cent average of the last five years.

The NZIER forecast for the current year is up on the 1.5 per cent forecast by the Treasury in last week's budget, because the think tank sees the low point in the economic cycle occurring a quarter earlier.

Analysts said the latest retail sales figures, a slight rise in unemployment, falling credit-card sales and a flagging house market all pointed to rapidly slowing domestic economic activity.

High interest rates and rising fuel and food prices were squeezing household budgets and impacting sharply on consumer spending. (dpa)