ISTANBUL
Fitch Ratings said Tuesday it affirmed New Zealand’s long-term foreign currency issuer default rating at AA+ with a stable outlook.
The rating agency said New Zealand’s ratings are supported by its advanced and wealthy economy, robust governance standards and policy framework.
Those factors, however, are balanced against the country’s macro-financial risks that arise from high household debt and a high current account deficit.
Fitch said New Zealand’s 2024 real GDP growth is forecast slowing to 0.1% this year, from 0.8% last year, “as the lagged effects of tighter monetary policy fully translate into higher debt servicing costs, a softening labour market and weak consumer sentiment amid sluggish house prices.”
The Reserve Bank of New Zealand lowered the official cash rate by 25 basis points from 5.5% on Aug. 13 August, having been one of the first developed market central banks to start tightening monetary policy in October 2021, it noted.
The agency anticipates the central bank further cutting to rates to 3.8% by end of next year and to 3% by the end of 2026.
While annual consumer inflation slowed to 3.3% in the second quarter of this year, down from a peak of 7.3% in the second quarter of 2022, the labor market has been cooling with unemployment edging up to 4.6% in April-June period, it noted.
