This is much less than consensus forecasts that the economy will grow by more than 2% in 2010.
The agency's New Zealand general manager, John Scott, says high unemployment, tight credit conditions and a rapid rise in government borrowing all pose risks. Globally, a cautious outlook is needed because sustained growth is not yet a certainty.
New Zealand is better placed than many other countries to benefit from an upswing in global economic growth, Mr Scott says, since it has an open market and went into recession earlier than other countries.
However, the strength of the dollar may hinder exporters, he says.