By Tracy Withers

June 23 (Bloomberg) -- New Zealand’s economy faces a deeper contraction this year than previously expected because of slowing exports and weak investment, according to a survey of economists.

The economy will probably shrink 1.6 percent in the year ending March 31, 2010, according to the average estimate of eight economists surveyed by the Wellington-based New Zealand Institute of Economic Research Inc. Three months ago, analysts forecast a 0.6 percent contraction.

New Zealand is in its worst recession in more than three decades as a global slump curbs exports and tightening credit prompts companies to stall investment and fire workers. Reserve Bank Governor Alan Bollard, who has cut the benchmark interest rate to a record-low 2.5 percent, this month said the economy may start to grow in the final three months of the year after contracting for seven consecutive quarters.

Housing investment will plunge 23 percent in the year ending March 31, according to the survey. Business investment, private consumption and exports will also shrink, it showed.

The jobless rate will rise to 7.2 percent by March, the economists said. They forecast 6.8 percent previously. Employment will fall 2.7 percent, they said.

The economy will rebound 2.8 percent in the year ending March 31, 2011, as housing and exports recover. The quarterly survey includes the forecasts of the Reserve Bank, the Treasury Department, five bank economists and the institute.

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Last Updated: June 22, 2009 20:23 EDT