S&P affirms New Zealand's AA Ratings with outlook – Positive

Dhwani Mehta FXStreet

S&P Global Ratings, in its latest sovereign credit report on New Zealand (NZ), affirmed the economy’s AA rating and maintained a positive outlook.

Key takeaways

NZ fundamentals are strong, hence a positive outlook.

Fiscal position should strengthen after the COVID-19 outbreak subsides.

Estimate NZ economy will contract 2.4% in fiscal 2020 before growing 1.7% in fiscal 2021 and 4.4% in fiscal 2022.

We believe NZ economy is in recession, and the government's fiscal position is weakening substantially.

NZD/USD reaction

The recovery in NZD/USD from a four-day low of 0.6008 remains safe and sound, with the further upside likely on positive S&P headlines. Meanwhile, NZ PM Jacinda Ardern’s invite to Australia’s National Cabinet on Tuesday also renders NZD-positive.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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