WELLINGTON, Jan. 14 (Xinhua) -- Business confidence in New Zealand is at its strongest in two decades, according to the results of a survey released Tuesday, which prompted commentators to tip a rise in interest rates in March.

Economic activity accelerated in the second half of 2013, according to the December 2013 Quarterly Survey of Business Opinion by the New Zealand Institute of Economic Research (NZIER).

"Businesses are the most optimistic they've been for 20 years and economic activity is strong. Optimism and activity are being realized into better profits, higher investment and more jobs," NZIER principal economist Shamubeel Eaqub said in a statement.

Last month, 52 percent of businesses were optimistic, the highest proportion since June 1994, and up from 33 percent in the previous survey in September.

Domestic trading activity strengthened to the highest level since March 2005 and hiring rose to the highest level since December 2006, with firms expecting to hire more staff at the start of this year, suggesting an improved outlook for jobs and wages, he said.

The economic recovery was broadening out from the earthquake- battered Canterbury region, which is undergoing reconstruction, to most regions across New Zealand, pointing towards a more sustainable and stable recovery.

Price increases were currently subdued, but firms intended to raise prices in coming quarters due to increasing capacity pressures and strengthening economic growth.

About 71 percent of financial services sector firms expect interest rates to rise, said Eaqub.

An Economic update from the ASB Bank said the Reserve Bank of New Zealand (RBNZ) would be concerned about capacity pressures in Canterbury flowing through to widespread inflation pressures.

While the RBNZ would probably hold the official cash rate (OCR) at the historic low of 2.5 percent at its next review later this month, the ASB Bank expected a rise in the OCR in March.