You are using an older browser version. Please use a supported version for the best MSN experience.

Moody's reaffirms NZ's credit rating

NZ Newswire logoNZ Newswire 24/03/2017

Finance Minister Steven Joyce is welcoming a reaffirmation of New Zealand's Aaa sovereign credit rating by Moody's Investors Service as evidence of the country's economic strength.

It's the credit rating company's highest rating and the outlook for the rating is stable.

"We expect New Zealand's economy to be among the fastest growing Aaa-rated economies in coming years," Moody's says.

"Strong population growth, including through migration, bolsters the economy's potential."

Also, as incomes in China and the rest of Asia continue to rise at a solid pace, demand for New Zealand's products and services, including dairy, tourism and education, will also continue to support growth, Moody's says.

Mr Joyce noted the reference to the positive impact of migration.

He says the credit rating statement is a very positive endorsement of New Zealand's economic performance and the government's policy settings.

Mr Joyce says the government will continue to implement its strong economic plan, focusing on building better public services and infrastructure, steadily reducing net debt, and ensuring the benefits of economic growth are shared with Kiwi families.

Still, Moody's says New Zealand's credit profile has external risks because of a large reliance on external financing, and elevated household debt is a risk for banks.

"While we think that the likelihood of these risks crystallising is low, they are somewhat more elevated than corresponding risks in many other Aaa-rated sovereigns," Moody's says.

Moody's expects New Zealand to be proactive in managing these risks.

"For example, the central bank's tightening in lending restrictions is working to cool the housing market, while further pre-emptive tightening measures are likely to be introduced to diminish the probability and reduce the negative consequences of a potential downturn in housing."

It says during the past decade New Zealand has faced economic shocks from the 2008 global financial crisis, the 2011 Canterbury earthquake, the downturn in commodity prices from 2014-2016 and more recently, the Kaikoura earthquake.

"The government's efforts over many years to preserve strong public finances provides it ample room to pursue expansionary fiscal policy to buffer the economy from any potential future shocks, which could stem from another natural disaster, a housing market correction or a sharp fall in global trade," Moody's says.

image beaconimage beaconimage beacon