"New Zealand's Credit Rating Upgraded to AA+ Amid COVID-19 Challenges"

[Asia Economy Reporter Yujin Cho] New Zealand, which is showing a V-shaped economic recovery amid the COVID-19 situation, received an 'AA+' rating from Standard & Poor's (S&P), Bloomberg reported on the 22nd (local time).

According to the report, the international credit rating agency S&P upgraded New Zealand's sovereign credit rating by one notch to AA+, citing a faster-than-expected economic recovery.

On the same day, S&P announced that it raised New Zealand's long- and short-term foreign currency sovereign credit ratings to AA+/A-1+, and its long- and short-term local currency sovereign credit ratings to AAA/A-1+. The rating outlook was assigned as 'stable.'

S&P stated, "New Zealand has responded well to the economic shock caused by the COVID-19 pandemic and lockdown measures, accelerating its recovery," and added, "Despite ongoing downside risks to the economy, fiscal indicators are expected to recover within the next few years."

S&P evaluated that large-scale fiscal and monetary stimulus contributed to the V-shaped rebound in the third quarter of last year.

Due to lockdown orders amid COVID-19, economic activity in New Zealand was severely contracted, with the country's gross domestic product (GDP) in the second quarter of last year falling 12.2% quarter-on-quarter, marking the largest quarterly decline since official records began in 1987. However, in the third quarter, New Zealand succeeded in rebounding to pre-COVID-19 levels. New Zealand's GDP growth rate in the first quarter was -1.6%.

New Zealand's net debt to GDP ratio peaked at 52.6% of GDP in 2023 and is expected to decrease to about 37% by 2035.

S&P assessed, "Although New Zealand's government debt is at a higher level than in the past, it remains stable compared to advanced countries," and added, "Considering New Zealand's relatively effective COVID-19 control, it is expected to withstand negative pressures such as a downturn in the real estate market."

This content was produced with the assistance of AI translation services.