New Zealand's economy and the government's books are on the mend after taking a hit from a protracted recession and a series of earthquakes several years ago, according to Moody's Investors Service.
The rating agency sees New Zealand's economic strength as 'high', its institutional strength as 'very high', the nation's fiscal strength as 'very high' and its susceptibility to event risk as 'low', it said in a statement. New Zealand holds an Aaa sovereign rating with Moody's, which has just completed its annual credit analysis on New Zealand, separate to a rating action.
New Zealand's accelerating economic growth and the forecast return to fiscal surplus in the 2014/15 year means government debt to gross domestic product will peak below the median for similarly rated nations and stabilise after that, Moody's said.
"New Zealand's economy and government finances are on an improving trend in the aftermath of a prolonged, albeit mild, recession and a series of earthquakes that had series effects on both," Moody's said.
The country's economic prospects for the year have been latched on to by international commentators, with HSBC dubbing it as likely to be 'the rock star economy'. Growth is expected to come from the accelerating pace of the Canterbury rebuild, Auckland house building and persistently high international dairy prices.
The nation's reliance on foreign savings and its current account deficits remain a challenge to New Zealand's creditworthiness, though Moody's noted a large portion of its international liabilities belonged to subsidiaries of Australian banks, and given the strength of the parent lenders, were unlikely to pose a significant risk.
Moody's assessed New Zealand's banking system risk as low, saying it is "one of the highest rated."
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Real-time electricity pricing more profitable – but few retailers offer it
- What's going on with NZ's private equity and venture capital scene?
- Christchurch council flatfooted on flooding – again
- GeoOp shareholders approve $9m 'Hail Mary pass'
- MARKET CLOSE: NZ shares gain; Metlifecare rises on upbeat analyst view, Auckland Airport, Z Energy up
Most listened to
- Toulouse School of Economics professor Thomas-Olivier Leautier says electricity retailing would be more profitable if retailers offered real-time pricing but few do
- NZVCA executive director Colin McKinnon on the deals and divestments of 2015
- David Seymour says the government is hypocritical to believe EVs are next big thing but also need help
- Tech investment commentator Ben Kepes slams GeoOp
- In his Editor’s Insight, Nevil Gibson reports on a conference to reduce air traffic congestion in Asia-Pacific