Fitch Ratings lowered New Zealand’s credit rating outlook to “stable” from “positive” on Tuesday, citing weaker growth prospects.
The outlooks on New Zealand’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) was revised to “stable” from “positive”, the agency said in a statement on Tuesday.
The rating agency affirmed New Zealand’s Long-Term Foreign-Currency rating at ‘AA’ and Long-Term Local-Currency IDR at ‘AA+’.
Fitch lowered its view on the country’s near-term growth prospects, citing deterioration in the outlooks for the prices of the agricultural exports.
According to the agency, New Zealand’s GDP growth slowed to 2.3 percent in 2015, no longer outperforming ‘AA’-rated peers.
GDP growth is expected to pick up to 2.4 percent and 2.6 percent in 2016 and 2017 respectively, which were slower than the expansions predicted in July.
Weaker growth prospects have translated into a slower-than-expected path of debt reduction, Fitch said.
The agency also revised the New Zealand Banking Sector outlook to “negative”, reflecting a potential deterioration in asset quality caused by the softening economic environment, particularly in the dairy sector.
The country’s ‘AA’ rating reflects a credible and flexible economic policy framework, supportive business environment and high standards of governance, Fitch said.
A faster-than-expected reduction in the general government debt-to-GDP ratio and a structurally narrower-than-expected current-account deficit could lead to a positive rating action, the agency said.
The material has been provided by InstaForex Company – www.instaforex.com