New Zealand's economy is past its prime and is now "over the hill" according to Westpac's chief economist.

But far from knocking on death's door Dominick Stephens says the economy is ageing gracefully.

"At seven years old, New Zealand's economic expansion is now entering its "mature" phase.

"Two years ago the economy was really in its prime, but now the economic cycle is over the hill."


Stephens said the drivers of demand were now more mixed with the housing market having cooled, the construction sector taking a breather and population growth slowing.

"But there are positives too – the terms of trade are strong and government spending is stimulatory. This mixture suggests the cycle will age gracefully, rather than expire suddenly, with middling rates of GDP growth," he said in the bank's latest economic overview.

However, like an ageing person, Stephens said the economy was starting to have aches and pains.

"For example, firms are having great difficulty finding labour. As a consequence, we may see wage growth and non-tradables inflation slowly start to pick up."

It also saw only a modest increase in inflation which meant the Reserve Bank could afford to wait until the end of 2019 before lifting the cash rate.

That meant mortgage holders could afford to hold off on locking in longer fixed-term home loans.

"...there is no hurry to fix your mortgage for long terms."

Stephens' description appears more downbeat than rival bank Kiwibank which this week also released its latest outlook suggesting the New Zealand's outlook was "fine but partly cloudy."

Kiwibank chief economist Jarrod Kerr said the New Zealand economy was in a "sweet spot" with a strong fiscal position and low-interest rates.

He predicted GDP growth to rise from 2.9 per cent this year to an above-trend rate of 3.5 per cent next year.

"The outlook is good but not yet great."

He also warned of risks saying most of New Zealand's risks came from outside the country and included the rise in protectionism and the potential trade war between the US and China.

"Trade wars don't end well. And New Zealand is now more exposed to an Asian slowdown than ever before."

He also warned of the risks of rising global interest rates as central banks moved to unwind the policies they used to stimulate growth in the wake of the global financial crisis.

"Financial markets are likely to become more volatile, and may react adversely to the draining of stimulus. And then there are the banks.

"A tightening in financial market conditions may lead to a significant rise in bank funding costs.

Closer to home Kerr also pointed to concerns stemming from the Australian financial services inquiry.

"The Australian Royal Commission may also crimp credit growth on both sides of the Tasman. It depends on how comfortable Kiwi regulators are."