Businesses are staying upbeat, but that's yet to follow through to spending and investment

Business think tank NZIER's continuing to predict a gradual economic recovery.

NZIER is forecasting two more OCR cuts this year - with falling interest rates supporting a gradual recovery in household spending.

But households are expected to remain cautious, with unemployment high.

Food prices are expected to push inflation back above three-percent, but the slow pace of recovery may help bring it back down again.