New Zealand has been told it needs better control of Government spending if the economy is to rebalance.
The OECD's two-yearly country report on Aotearoa's economy says it has slowed with higher interest rates weighing on construction and inflation cutting into people's spending power.
Public spending has been higher than planned in recent years due to the COVID-19 pandemic and spending overruns.
"The Government should set operating allowances and tax policies that will gradually reduce the fiscal deficit to reach budget balance," the report said.
New Zealand's productivity remains substantially below other OECD countries, which is partly due to a lack of competition.
The report recommends boosting competition through Commerce Commission market studies and the 'break-up" of dominant players.
Educational achievement also came under the spotlight with the study remarking that results have fallen markedly at both primary and secondary levels over the past 20 years.
Among its suggestions were lifting attendance from early childhood education onwards, especially of lower socio-economic groups and providing a more knowledge-rich national curriculum.
The OECD report also said a more systematic approach should be taken to reducing emissions and adapting New Zealand to climate change-related extreme weather.
"This requires reviewing the treatment of forest removals in the Emissions Trading System, finding new funding for local government to build more resilient infrastructure, ensuring insurance remains comprehensive."
Finance Minister Nicola Willis said the report reinforces the importance of bringing Government spending under control.
The OECD predicts that inflation will drop to 3.2 percent in 2024 with growth expected to slow to 0.8 percent, before picking up in 2025 to 1.9 percent.
The report comes just three weeks ahead of the National Coalition Government's first Budget.
