New Zealand Rating Outlook Cut to Negative by Fitch on Debt

Article content(Bloomberg) — New Zealand’s credit rating outlook was cut to negative by Fitch Ratings on concern it will take longer than expected to rein in government debt. Sign In or Create an AccountEmail AddressContinueor View more offersArticle content“A substantial debt reduction is becoming more difficult to envisage, as fiscal consolidation has been delayed in the past few years,” Fitch said in a statement, while affirming the country’s AA+ rating. “The general government debt-GDP ratio has increased substantially over the past six years as the economy has been buffeted by a number of shocks.”Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentGovernment debt will rise to 56% of gross domestic product in the fiscal year ending June 2027, and only return to 2025 levels by the end of the decade, Fitch said. That would be “well above” Fitch’s forecast for debt to reach 36.1% of GDP in fiscal 2027 when it upgraded the rating in 2022. Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentFigures earlier this week showed New Zealand’s economic growth slowed sharply in the final three months of last year, leaving it in a weaker position to absorb fallout from the Iran war. Article contentGDP advanced 0.2% in the fourth quarter and third-quarter growth was revised down to 0.9%. Economists expected a 0.5% expansion. Article contentNew Zealand’s government bonds are, nevertheless, one of the few sovereign fixed-income markets that are up year-to-date in US dollar terms, based on Bloomberg Indexes. Their 0.8% gain compares with a loss of 0.6% for US Treasuries, but trails behind a 4.3% return for Australian securities.Article contentFitch said the Iran war poses some risks to New Zealand, given its substantial dependence on energy imports. While direct trade links to the Middle East are small, inflationary effects and a broader global weakening could have a negative impact.Article contentArticle contentNew Zealand Finance Minister Nicola Willis said Fitch’s move to lower the ratings’ outlook “is a reminder of why fiscal discipline is so important.” Article content“The government remains committed to achieving its three fiscal goals – reducing spending as a proportion of GDP, returning the headline operating balance measure to surplus and bending the debt curve down,” she said in a statement. Article contentThe government’s recent forecast that economic growth will reach about 3% by early 2027 will need to be revised in the wake of the Iran conflict, Willis said. “Energy market disruption adds real uncertainty, and that is precisely why careless spending is off the table,” she said. Article contentArticle content(Adds bond market performance in sixth paragraph.)Article contentTrending TC Energy could be open to return to B.C. LNG pipeline project as global gas crunch threatens Oil & Gas Garry Marr: Why it could be the right time to walk away from your real estate Personal Finance Dennis, 79, is worried about a market crash. Should he move his portfolio to 100% income? Investor Public-private partnership launches $1.3-billion fund to purchase unsold GTA condos Real Estate Posthaste: Canada sets two new population records as 'demographic engine' backfires News Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. TC Energy could be open to return to B.C. LNG pipeline project as global gas crunch threatens Oil & Gas Garry Marr: Why it could be the right time to walk away from your real estate Personal Finance Dennis, 79, is worried about a market crash. Should he move his portfolio to 100% income? Investor Public-private partnership launches $1.3-billion fund to purchase unsold GTA condos Real Estate Posthaste: Canada sets two new population records as 'demographic engine' backfires News