The Stock Exchange closed down 2.6 percent and markets worldwide were feeling the impact of the latest uncertainty after an international credit rating agency downgraded the US from AAA to AA+.
"The downgrade of the US shows we continue to live in unusually risky and uncertain global environments," Mr Key said at his post-cabinet press conference.
"The Government has focused on debt and managing spending, this approach has been in all three of our budgets and recent events are further evidence we have moved in the right direction."
Mr Key said he didn't think Treasury's economic growth projections were going to be proved wrong because there were several factors favouring New Zealand, like the Christchurch rebuild and the Rugby World Cup.
He said he was "more optimistic" about the future than those who feared a deepening international recession.
Companies were in a better position now than they had been in the past.
He thought there would still be a strong appetite for shares in partially-sold state assets, a policy the Government intends pursuing if it wins the election.
Labour Party leader Phil Goff said the international instability was a worry because New Zealand's economy was fragile.
"Very clearly we need to be doing a lot more in terms of planning for economic recovery," he said.
"The Government has its head in the sand if it believes that just selling assets and borrowing to pay for tax cuts for the most well-off will be the answer to New Zealand's precarious economic position."
Mr Goff said the situation reinforced the strength of Labour's plan, which includes a capital gains tax and rules out any state asset sales.
He said partially selling state assets was "a dumb idea", particularly when international uncertainty would mean lower prices.
