The country’s handling of the pandemic and strength of economic recovery has been recognised with a raise in the sovereign international credit rating.
S&P Global Ratings has raised the rating to AA+ with a stable outlook from AA with a positive outlook.
The agency, one of the big three in the world, said New Zealand has recovered quicker than most advanced economies because it has contained Covid-19 better than most.
“We now believe that the government’s credit metrics can withstand potential damage from negative shocks to the economy, including a possible weakening of the real estate market, and its fiscal position at the ‘AA+’ rating level.”
S&P said the upgrade was the first for any economy since the outbreak of the pandemic.
It said the initial measures to contain the virus had resulted in a recession but the strength of the recovery and relatively low debt supported the ratings upgrade.
“New Zealand’s debt profiles compare well to those of its similarly rated peers and support its credit rating, even though its debt levels are higher than in the past,” the agency’s commentary said.
It cited the booming real estate market and consequent rise in private debt as risks, but ones that were manageable.
“High property prices and household debt present a risk to the economy. However, the sovereign has headroom at the current rating to address a modest correction in property prices should it occur.”
S&P Global forecast the economy to grow at about 3.2 percent a year over the next three years.
The other main ratings agencies Fitch and Moodys rate New Zealand at AA+ and AAA respectively.
Improved ratings from the agencies give international lenders confidence to lend at better interest rates.