New Zealand has been judged the most peaceful nation in the world.

An Australian thinktank recognised our stable political situation, relatively low rate of violence and decrease in military spending.

The Institute for Economics and Peace list was created after the start of the global recession, finding the financial meltdown was dragging the world toward political instability and conflict.

It laid out its key findings ahead of the publication of its annual Global Peace Index, a report prepared with the Economist Intelligence Unit.

The report, which surveyed 144 countries, says New Zealand's rise to first is partly explained by the election of a National-Act coalition last year.

"The centre-right National Party has a strong popular mandate and a robust parliamentary majority by New Zealand's standards, putting the new Prime Minister, John Key, in a good position to push through his agenda."

It also says New Zealand received the best possible scores for the likelihood of violent demonstrations, the homicide rate and the level of respect for human rights.

The rise to first position is also related to the fall of Iceland from the top spot last year, which reflected the increase in violence following the banking collapse that engulfed its economy in September.

Professor Kevin Clements from the University of Otago, who was on the panel of experts for the index, told the Herald: "The index is a pretty good reflection of countries people want to live in, because on bicultural issues and a variety of factors we are scoring well.

"If you look at the top 20, they are all small nations based on strong welfare principles, all with good and relatively uncorrupt governance."

Professor Clements, who is director of the National Centre for Peace and Conflict Studies, said the National Government faced a challenge in preserving New Zealand's top ranking.

"The question is whether the current Government will be as committed as the last ... a role for New Zealand as a conflict-resolving nation. I will be interested to see if we rank as high, but I can't imagine we'll slip far."

He said the greatest threat to New Zealand's peacefulness would be a more severe economic downturn or an increased sense of grievance toward Treaty of Waitangi issues.

Top 10 most peaceful nations

1. New Zealand
2. Denmark
2. Norway
4. Iceland
5. Austria
6. Sweden
7. Japan
8. Canada
9. Finland
9. Slovenia

Ten least peaceful
1. Iraq
2. Afghanistan
3. Somalia
4. Israel
5. Sudan
6. Democratic Republic of the Congo
7. Chad
8. Pakistan
9. Russia
10. Zimbabwe

Click here for the full list.