Finance Minister Bill English has welcomed Standard and Poors’ reaffirmation of New Zealand’s foreign currency AA rating with a stable outlook.
“This is welcome news and confirms New Zealand is heading in the right direction – and it is better placed than many other countries,” Finance Minister Bill English says.
“Standard & Poor’s notes that New Zealand has favourable prospects for sustained growth while there remains strong demand for agricultural exports.”
New Zealand is one of only nine countries with the highest possible Aaa rating and a stable outlook with Moody’s, and it has an AA rating with Fitch.
In its report today, Standard & Poor’s notes the Government is making progress in getting its own deficits and debt under control, and that it is on track for a modest fiscal surplus in the 2014/15 year.
“However, as the ratings agency points out, New Zealand’s high level of private sector external debt remains its largest vulnerability.
“The Government is aware of this longstanding problem and that is why it is focused on building a more productive and competitive economy based on more savings and productive investment.
“New Zealand’s household savings are positive for the first time since 2000 and household debt has fallen. However, private sector debt levels remain high and we will continue to encourage savings, business investment and growth through our economic programme,” Mr English says.
The turn around in private savings while small is significant given how long New Zealanders have been spending more than they’ve been saving.
People have got the message that was second-nature to my parents’ generation – too much debt is dangerous; if you can’t afford something you save for it until you can.
But personal debt is still far higher than is safe at any time let along now when the global economic situation is so uncertain.