The New Zealand Treasury has cut the country's growth forecast, saying the European credit crisis is threatening the economies of major trading partners.

Its November Monthly Economic Indicator issued Monday said the Treasury's Pre-election Fiscal and Economic Update (PREFU) last month assumed that European governments would manage the crisis without too much more damage to the real economy.

However, financial tensions had escalated and dragged down growth forecasts in the region and across New Zealand's major trading partners.

The outlook had weakened to the extent that the Treasury now expected New Zealand's economic growth in the year ending March 2013 to be closer to 3 percent than the 3.4 percent forecast in the PREFU.

The Treasury continued to expect the reconstruction of the earthquake-stricken Canterbury region to begin in earnest in the second half of 2012 and to provide an offset to global weakness.

The latest Treasury forecast is in line with the Organization for Economic Cooperation and Development (OECD) growth forecast for New Zealand issued last month.

In its twice-yearly economic outlook, the OECD forecast a growth rate for next year of 2.5 percent, down from 4.1 percent forecast in May.

It also predicted 3 percent growth in 2013, saying growth would accelerate in the next two years as the reconstruction of Canterbury progressed.

In its economic forecast summary, the OECD said post-earthquake rebuilding would provide ongoing stimulus despite a relatively high New Zealand dollar and a weaker global economy that would " undermine exports for a time."

Xinhua