New Zealand economy, finances improving, Moody’s says
Jan. 29 (BusinessDesk) - 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)