S&P Reaffirms New Zealand Credit Ratings Amid Improving Growth Outlook
S&P Global Ratings has reaffirmed New Zealand's sovereign credit ratings, citing an improving growth outlook. The agency forecasts annual GDP growth of around 2.5% in fiscal 2027, which would mark a recovery from a slow period. The growth is expected to be driven by robust export-oriented industries such as dairy, horticulture, and tourism, although domestic conditions remain fragile due to high living costs and subdued consumer confidence.
The rating agency also expects the general government deficit to widen to 5.1% of GDP in fiscal 2027 before gradually improving to below 4% in fiscal 2028. Net general government debt is forecasted to stabilize at 38%-39% of GDP over the next three years.
New Zealand's monetary policy flexibility, wealthy economy, and strong institutions were cited as key factors supporting the ratings. However, external imbalances remain a weakness, with the current account deficit estimated at around 3.2% of GDP in fiscal 2026.