New Zealand should be one of the stronger growing economies in the developed world in the coming year, according to the Organisation for Economic Cooperation and Development's (OECD) latest global outlook.
But the pace of growth has been trimmed in the outlook and it said the government needed to deal with growing inequality in New Zealand society.
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The OECD report said New Zealand's growth is expected to be around 3 percent this year, slowing to 2.7 percent in 2017.
Read the OECD's latest outlook here
It has also forecast inflation to pick up from an annual rate of 0.6 percent this year to 1.4 percent next year, while unemployment is expected to hold steady at around 5.8 percent.
The report noted that low dairy prices and the slowing earthquake rebuild would likely weigh on growth next year, and warned of the impact of a sharp downturn.
"Should this drop away suddenly, both consumption and housing investment would suffer," the report said.
It also said income inequality and poverty in New Zealand had worsened and needed to be tackled by the government.
"It needs to do so by improving actions across the whole public sector in areas such as social housing, obesity and early childhood education."
The growth forecasts for New Zealand were towards the top of the OECD table, similar to those for Australia, but outstripping those for the European Union, Britain, and the United States. It forecast annual growth for China of 6.5 percent this year slowing to 6.2 percent next year.
The OECD said the world economy was likely to grow around 3 percent next year, which was little changed from this year.
It also warned the world was "ensnared in a low growth trap", which needed to be countered by governments spending on infrastructure.