New Zealand has an international reputation as a corruption-free country.

New Zealand has regained its top spot in a global watchdog's rundown of the most corruption-free countries in the world.

Transparency International, a Berlin-based anti-corruption organisation, uses World Bank data, the World Economic Forum and other institutions to rank 176 countries by perceived levels of corruption.

New Zealand and Denmark were jointly ranked as the two least corrupt nations but the watchdog warned about the rise of populism risking greater corruption around the world.

The organisation said many other countries had slipped down the rankings and scored lower than previous years.

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New Zealand has ranked high in the annual list since it was started in the mid-1990s, and was the least corrupt country, or joint leader, in the rankings for seven consecutive years. But, Aotearoa slipped down the rankings in 2015 and 2014.

New Zealand and Denmark have topped the rankings as the least corrupt of 176 countries.

Nordic countries Denmark, Finland, Sweden, Switzerland, score consistently high rankings.

The 2016 rankings put New Zealand and Denmark in joint first place with a score of 90, followed by Finland, Sweden, Switzerland, Norway, Singapore, Netherlands, Canada, and Germany.

At the bottom of the index, Somalia was ranked the most corrupt country. Other countries with lower rankings - which typically point to badly performing public institutions, bribery or corruption - were Syria, South Sudan, North Korea, Afghanistan, and Iraq.

Despite New Zealand's climb up the rankings, the organisation was at pains to point out no country gets close to a perfect score.

Transparency International said populist leaders like US President Donald Trump and French presidential candidate Marine Le Pen regularly drew links between a "corrupt elite" and the marginalisation of working people. But anti-establishment parties generally failed to address corruption once in office, the group said.

"In the case of Donald Trump, the first signs of such a betrayal of his promises are already there," the organisation's research chief Finn Heinrich wrote in a blog about the report.

Cameron Burnell/Fairfax NZ The annual index ranks 176 countries for their perceived corruption levels.

He said Trump was talking about "rolling back key anti-corruption legislation and ignoring potential conflicts of interest that will exacerbate, not control, corruption."

The report came two days after constitutional and ethics lawyers filed a lawsuit alleging Trump was "submerged in conflicts of interest". Trump dismissed the allegations and said the lawsuit filed by Citizens for Responsibility and Ethics in Washington was "without merit".

BusinessNZ chief executive Kirk Hope said corruption destroyed honest business and prosperity.

"New Zealand's reputation for honesty, transparency and justice is a great advantage in conducting international trade and other dealings.

"We need to continue to uphold our standards and institutions and maintain this enviable position."

Transparency International's annual report said Qatar showed the biggest drop in confidence in 2016 after scandals involving FIFA and reports of human rights abuses.

Somalia was the worst performer on the list for the tenth consecutive year.

The report highlighted pervasive public sector corruption around the world.

Sixty-nine percent of 176 countries scored below 50 on the index scale of 0 to 100, with 0 perceived to be highly corrupt and 100 considered "very clean."

More countries declined in the index than improved in 2016.

Once in place, populist leaders appeared almost "immune to challenges about corrupt behaviour," Heinrich wrote.

The scores of Hungary and Turkey - countries with autocratic leaders - fell in recent years, for example. Argentina, which ousted a populist government, saw its score improve.

To break the "vicious circle" between corruption and the unequal distribution of power and wealth in societies, governments should stop the revolving door between business leaders and high-ranking government positions.

The organisation also called for greater controls on banks and other businesses that helped launder money, and moves to ban secret companies that hide the identities of their real owners.

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