Economy in ‘danger zone’

New Zealand’s economy could be entering a ‘‘danger zone’’, economists warn, in which a weak start to the year feeds falling business confidence, which could see the economy lose momentum throughout 2018.

On Thursday Statistics New Zealand will release economic growth figures for the first three months of 2018 expected to show the economy expanded by around 0.5 per cent. Three of New Zealand’s four largest banks are tipping 0.4 per cent growth.

If the figures turn out to be correct, annual growth would have slowed to around 2.6 per cent, the slowest rate of annual expansion since 2014.

While a bounce-back in the current, June 30-ending quarter, is likely, economists are increasingly warning of a loss of momentum.

‘‘We have been warning for some time of the likelihood of a soft patch in growth over the first half of this year, as uncertainty around the new Government’s policies weighs on firms’ expansion plans and households’ willingness to spend,’’ Westpac senior economist Michael Gordon said.

‘‘A lift in government spending will help to support growth, but this is more of a prospect for next year’s growth rate.’’

Westpac expects Thursday’s figures to show 0.4 per cent expansion, well below Treasury and the Reserve Bank’s 0.7 per cent prediction.

Weaker-than-expected growth ‘‘would put some pressure on the Government’s revenue and spending projections, and would reinforce the message that official cash rate hikes are quite a way off,’’ Gordon said.

Since September and the general election, headline business confidence has fallen sharply. While the ‘‘own activity’’ measure – which asks individual businesses how they are performing – held up initially, the figure has drifted lower in early 2018.