New Zealand’s credit outlook was raised to positive from stable by Fitch Ratings, which cited the nation’s improving fiscal situation and supportive economy. The currency climbed to an almost three-year high.
Fitch affirmed its long-term foreign currency rating at AA, two grades below the top score. The New Zealand dollar touched 88.06 U.S. cents following the announcement, the highest since August 2011.
“Fiscal consolidation is strengthening the resilience of New Zealand’s sovereign credit profile,” Fitch said in a statement today. “The authorities have a credible plan to lift the fiscal surplus in the years ahead.”
The South Pacific nation’s building boom is helping sustain an economic expansion that has prompted the central bank to raise its benchmark lending rate three times this year and signal that more may be on the way. Prime Minister John Key has projected that the budget will return to surplus in the current financial year for the first time in seven years.
Gross domestic product increased 1 percent in the first three months of this year from the fourth quarter, data showed June 19. The government’s operating surplus will be NZ$372 million ($327 million) in the year through June 2015, up from a previously forecast NZ$86 million, Finance Minister Bill English said in his annual budget on May 15.
“The macroeconomic record and prospects are supportive,” Fitch said. “New Zealand’s economic policy framework, business environment and standards of governance rank among the world’s strongest from a credit perspective, and warrant high-grade sovereign ratings.”
To contact the reporter on this story: Benjamin Purvis in Sydney at firstname.lastname@example.org
To contact the editors responsible for this story: Katrina Nicholas at email@example.com Rina Chandran, Nicholas Reynolds