New Zealand’s credit rating stays at AA+, even after a change in government. S&P Global Ratings confirmed this rating, which is due to the country’s good management during the pandemic, its low debt, and strong economic growth. Martin Foo from S&P said the recent election bringing in the National-led government will not affect the rating. Both the Labour and National parties have similar financial plans.
However, there is a need for the new government to manage the fiscal deficit. This helps prepare the country for any future crises and ensures both monetary and fiscal policies align.
New Zealand’s official debt has gone up but remains one of the lowest among developed nations. Yet, if the new government stops the ‘Affordable Waters’ policy, local councils might face challenges. This policy could have reduced their high debt levels. Stopping it might mean councils have to borrow more for water resources.
S&P predicts a growth of a little over 2% yearly for the next three years. They expect people to spend less and businesses to be careful with investments. House price increases will be slow. There might be more bank credit losses, but no significant changes from the Commerce Commission’s study are anticipated.
