Photo: RNZ
A second international credit rating agency has downgraded its outlook for the New Zealand economy.
Moody’s, while reaffirming its top tier triple A (AAA) rating for New Zealand said in a new report that global economic and political uncertainty presented downside risks to growth.
It has now changed its outlook for New Zealand to “negative” from “stable”.
“Inflation pressures also persist, including fuel price increases, stubborn non-tradeable housing costs and utility prices, and higher electricity costs.” the agency said in its report.
New Zealand’s ‘AAA’ rating was affirmed by Moody’s thanks to support from strong institutions and policy framework, even as it said weaker growth, tight monetary policy, and higher debt servicing costs added pressure to the fiscal outlook.
In March, Fitch lowered New Zealand’s outlook to ‘negative’ from ‘stable’, citing increasing difficulty in reducing debt due to delayed fiscal consolidation.
In its report Moody’s also noted New Zealand’s delayed returned to a budget surplus and that recent shocks had increased the country’s debt burden.
RNZ Business Editor Corin Dann said downgrades to outlooks by credit rating agencies could be seen as a warning to countries that unless they started to address their underlying financial positions, they could face a full and potentially more damaging credit downgrade in future.
New Zealand last faced a full rating downgrade in 2011 after the global financial crisis.
-Reuters with additional reporting by RNZ