The Prime Minister has shrugged off worries about the economy but opposition parties accuse John Key of being complacent.

Photo: RNZ / Alexander Robertson

Mr Key has rejected suggestions from ANZ economists that things are getting so bad the Government will need to spend more money to stimulate the economy.

In its latest weekly market focus report the ANZ warned the economy was slowing and it was time for the Government to step in by spending more.

New Zealand First leader Winston Peters agreed things were grim.

"We're staring down the face of recession. This is a country that just six months ago fought an election on a 'rockstar economy'. That fiction was evinced by a banker, and so much of what's wrong with this country is foreign banks appearing every day on the media telling us how good it is.

"Well there wouldn't be a place where the Australians make so much money in banking as in New Zealand. That's just one example," Mr Peters said.

But Mr Key said that was not the advice he was getting from the Treasury and the economy was still growing strongly.

"I am not at at all panicked about what I see in the economy at the moment but I accept there are a few headwinds there that weren't so prevalent a little while ago. But I really urge people to take a deep breath. I mean - yes dairy prices are down a little bit, but there's a lot of other factors in our economy," he said.

Photo: RNZ / Alexander Robertson

Mr Peters was not impressed with Mr Key's response.

"That sort of glass half full conversation is fantastic, but when it sends the wrong signals to so many people in so many industries it is counter-productive for a country. The reality of the situation is that New Zealand, if it's going to get its way out of where we are currently set, we have got to...own where we're going to. We've got to use our money to get there," he said.

The Labour party said the Government was playing down the headwinds in the economy and must act to offset international turmoil.

Labour Leader Andrew Little said diminishing confidence in the Euro, the economic slowdown in China and the knock-on effects in Australia were all affecting New Zealand.

He said more investment was needed in housing, rail and regional development.

Labour's finance spokesperson Grant Robertson also said the Government had got it wrong.

"I think the degree of complacency we're hearing from the Government is worrying. You know they've relied for the last few years on good commodity prices to make out the economy is going gangbusters, the so-called rock star economy. The reality is that that was only ever going to be a short-term thing."

Mr Robertson said the Government could increase its spending on infrastructure to help lift the economy in the short term.

Photo: RNZ / Diego Opatowski

But he said in the long term it needed to invest in diversifying the economy, promoting research and development and supporting the regions.

Mr Key said while he was not worried, the Government was prepared to be flexible if things changed.

"If in the end the Government felt it had to respond it's going to govern for the conditions it finds itself in on any one given day. We're not so ideological in our view that says we can't change our spending parameters. It's just simply that's not what we think we need to do at the moment," he said.

Mr Peters said he had consistently warned that the economy was not in as good a shape as the Government made out.

"Well I don't want to say I told you so, but I damn well did," he said.

Mr Key remained confident though, that despite plummeting dairy prices, the crisis in Greece and a slowdown in China, the New Zealand economy would be just fine.