While economists are forecasting an up to 0.6% contraction in growth, some economists are looking further out and calling for a focus on productivity, with ANZ chief economist Cameron Bagrie saying the country should be looking at the medium term and the type of recovery the economy is going to have.
"Forget the R word. The real message is one of rebalancing as growth shifts from the domestic and spending side of the economy to the earnings sector," Mr Bagrie said.
Two recent separate polls of 12 economists' forecasts came to the same conclusion, that economic growth would decline by a median of 0.3%.
A recession is formally acknowledged following two successive quarters of negative economic growth.
The quarter to June is also expected to be negative.
Mr Bagrie said economic weakness was "universally expected", noting also that for the first time Minister of Finance Michael Cullen last week admitted to the likelihood of negative growth for the quarter.
Dr Cullen cited "significant headwinds" from oil and food prices, the housing downturn, global credit crunch, drought and monetary policy, saying growth for the March quarter "seems inevitably to be negative growth".
Westpac senior economist Doug Steel was picking a 0.3% drop in GDP, with expected annual growth declining from 3.6% to 2.1%.
Despite the buoyant Fonterra payout to come, agriculture was expected to show a "hefty negative" decline because of the drought, with more negatives in manufacturing, residential and commercial building from the present quarter.
"It will be a sea of red. The primary and manufacturing sectors will be down, which will spill into the wholesale and retailing sectors," he said.
Mr Steel was "cautiously optimistic" that growth would rebound next year, with less drag expected from the residential housing market, Fonterra contributing more from its payout for the rural sector and the Government's tax cuts making some difference for consumers.
Mr Bagrie said instead of short-term discussion on recession, conceding there was a possibility of June quarter negative growth, there were three main medium-term points to consider.
The first was the consolidation of household spending, prompted by issues including negative savings rate and high debt serving burden, but he doubted even the positives of tax cuts, Government infrastructure spending and the record Fonterra payout would not be the economy's saviour during 2009.
"We suspect that given declining house prices removing the wealth effect from spending, and now a rising unemployment rate, it will take a lot to get them spending again, irrespective of tax cuts, which are basically petrol and milk money anyway."
Secondly, the strength of the New Zealand dollar.
The performance of the US dollar will have a major effect on economic recovery.
"The domestic sector is abdicating [economic growth] but the earnings and export sector cannot yet fill the void," noting domestic accounts for two-thirds of the economy and earnings/export only one-third.
The third point, and the "No 1 fundamental within the economy", was productivity growth as the next leg of the economic cycle which requires more output for less input.
"We will not see a sustainable upturn for the economy until productivity growth improves."
That growth to date had been "woeful" and complacency had crept in, including employment growth outstripping hours worked or investment in labour before capital spending requirements, Mr Bagrie said.
