Wellington  - New Zealand is poised to recover from recession as the economy has hit the bottom of a downturn cycle, the country's leading independent economic think tank said on Tuesday.

Increases in energy and food prices appeared to be past their peak, the New Zealand Institute of Economic Research said, and it noted that interest rates had started to ease, albeit slowly.

Analysts believe the central bank will cut its benchmark interest rate again in a scheduled review of monetary policy on September 11, after reducing it to 8 per cent on July 24.

The institute said wage growth would remain high and tax cuts due to take effect in October would boost consumer confidence and spending.

The economists said that New Zealand was currently in recession with real gross domestic product likely to decline for three consecutive quarters from March 2008.

It declined 0.3 per cent in the March quarter, the first fall in two years, and the institute said domestic trading activity indicators suggested it declined further in the June quarter and was likely to drop again in the September quarter.

"The current recession is unusual in that the slowdown in economic activity has been spread across the major areas of expenditure," the institute reported.

"Often one of either consumption, investment or the external sector leads the way. This time, all three areas of expenditure have chimed in together. The economy has been hit by a salvo of self- inflicted and external negative factors."

The institute's economists also tipped that the property market, which has slumped, will not fall much further.

"We think it will be supported by private investors looking for safe havens for their funds which they are now very reluctant to leave with finance companies," they said. "The share market is unlikely to be an attractive alternative to many of these people." (dpa)