Moody's commentary on the latest New Zealand election

Moody's commentary on the latest New Zealand election

Matthew Circosta, Analyst, Moody’s Investors Service

• Moody’s expects the broad consensus on fiscal discipline to be maintained within the coalition government when it is formed, and the government to continue to deliver on the goals of maintaining budget surpluses and reducing debt over the medium term.

• Potential new spending to address some of the pressure on households’ budgets from fast rising housing costs and static real wages will likely be at least partly offset by spending cuts elsewhere.

• New Zealand’s track record of fiscal prudence provides it significant fiscal policy flexibility, such that it can fund spending on new measures while maintaining fiscal surpluses.

• New Zealand’s strong economic profile reinforces robust public finances. High income levels, robust population growth and continued strong Asian demand for New Zealand dairy, tourism and education support strong growth prospects. Moody’s expects real GDP growth of around 2.5% to 3.0% through 2017 and 2018, above the Aaa-rated median of about 2.0%.

ENDS

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