Member log in

New Zealand economy, finances improving, Moody’s says

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."

(BusinessDesk)

Comments and questions
6

Just as we start to get back on track we have the Labour Party promising to give it all away and drag us back 6 years....

Give it all away? They won't stop at that.

And we have the National Government policies encouraging investors to put money into investment housing instead of business's whch created wealth and jobs. Which is the worst?

Fair point. Depends a bit on how long it goes on for though. Long term you're right (and failing to support business investment capital is a historical failing of all NZ governments) but short term is justified.

I prefer to keep my money and invest it as I see fit. Not having some socialist with failed ideologies overtaxing me to then redistribute those funds to someone with their hand out.

When it comes to government - less is always more...

There is no difference in any policy that favours property over shares or businesses. It's a widely held misconception; In fact this govt. has disadvantaged property investors by inexplicably disallowing depreciation, which does not apply to any other investment.