Exit polls suggest that Greek citizens have rejected austerity conditions demanded by international creditors in a referendum vote on Sunday - a move that could see it forced to leave the European Union and be unable to repay loans.
The Greek debt crisis surfaced at the height of the Global Financial Crisis and there are fears the economies of western Europe could suffer if Greece leaves the EU.
Mr Key told TVNZ's Breakfast programme this morning that he agreed with Finance Miinister Bill English, who was not predicting any ill-effects in New Zealand.
"I think the probability of a contagion affect or domino affect is much lower now than it was three years ago. Europe's stabilised a bit," Mr Key said.
"The world's a lot different place three or four years on."
Greece would have to take a step back and thing about what it was doing, he said. Should it leave the EU and replace the Euro with its own currency, the drachma, tourism would be attractive, as would Greek exports and foreign investment in the country.
"They'll have to work through their own plan and that includes fixing their tax system."
Mr Key later told Radio New Zealand he thought Greece would either leave of be thrown out of the EU.
"It's very difficult to know exactly what the Greek voters think they're voting for or against, but I would have to think essentially they are saying no to an austerity package and no to meeting the terms and conditions the [International Monetary Fund] are setting, and on that basis something's got to give."
Three years ago such a move would have had an effect on Italy, Spain and France, which were "quite indebted and fragile".
"Europe itself has stabilised in the last three years and is probably in a much better position to handle if there was an exit of Greece."
NZ Greek community backs 'No' vote
Members of Auckland's Greek community gathered yesterday to talk about the state of the Greek economy and how it affects their families back home.
Sofia Athineou, a mother of three teenagers, said acceptance of international bailout conditions in the referendum overnight would "destroy" Greece.
"So, this is a vote for No," she said, her body draped in a Greek flag. "It's for the future of my kids, for the future of all the Greeks, for my mother who struggles to pay anything with her pension and for my ancestors, who fought in all the wars to give us the freedom to live in a beautiful country.
"I live in New Zealand since 2000 and my kids have a great life here, but I don't want the people of my own country to be slaves."
A "No" vote was also preferred by a new arrival from Greece at the Hellenic Community Hall in Western Springs.
Giorgor Lourmas, a civil engineer, said his pregnant wife was coming to join him in a few months and he felt that under the present economic crisis, New Zealand was a better place to raise his first child.
"Greece is in a no-hope situation - it's at a dead end and we hope that with a No vote, it becomes better," Mr Lourmas said.
Auckland Hellenic Community president Costa Kritos said Greece had borrowed and spent money from banks. "But you can't blame the Greeks only, because while Greeks were spending, why did the International Monetary Fund and the European Commission keep pouring money in?
"They could have stopped after the Olympic Games when we started to go downhill and could not keep up the repayments."
Christos Montes said he hoped the younger people would vote "No" because they would be the most affected under austerity measures. "Shrinking a bad economy will not help in the long term and is not sustainable so you have to think about solutions."
Mr Montes said a "No" vote was the consensus of the 50 people at the hall, but was not the formal view of the community in Auckland, which numbered about 400.
