Moody’s: New Zealand credit profile reflects high economic resilience and fiscal metrics

The US-based ratings agency, Moody’s Investors Services, is out with its annual review "report on New Zealand’s economy, with the key highlights found below.

“New Zealand credit profile reflects high economic resilience and also fiscal metrics.

Vulnerabilities mitigated by effective institutions.

The Global demand for NZ agriculture, tourism related products will remain robust.

New Zealand's economic profile supports the newly elected coalition government's credit-positive commitment to preserving fiscal surpluses and reducing government debt further over the next five years.

The stable outlook on New Zealand's Aaa sovereign rating is anchored by Moody's expectation that New Zealand will maintain strong fiscal and monetary discipline that provides the economy and financial system capacity to adjust to shocks and keeps its credit metrics consistent with an Aaa rating, even in the event of such shocks materializing.

Moderate gross government debt levels of around 30% of GDP afford the government higher fiscal room than many other similarly rated high-income sovereigns to counter shocks.

However, Moody's say they could "downgrade New Zealand's Aaa rating if a large external or domestic shock - perhaps from a natural disaster, a housing market correction or a sharp fall in global trade - results in more government debt that is not reversed in subsequent years. “