Moody’s lowers NZ outlook to ‘negative’ on fiscal risks
Credit rating agency Moody’s downgraded New Zealand’s outlook from stable to negative, citing increased risks to the country’s fiscal outlook due to global economic and geopolitical uncertainties.
Moody’s has confirmed New Zealand’s top Aaa rating, thanks to the support of strong institutions and policy framework, although weak growth, tight monetary policy and high debt servicing costs weigh on the fiscal outlook.
“Global economic and geopolitical uncertainty present downside risks to growth,” the agency said in a report published Wednesday.
“Inflationary pressures also remain, including increases in fuel prices, persistent untradeable housing costs and utility prices, and high electricity costs.”
Moody’s said New Zealand’s return to budget surplus had been delayed by a year, while recent shocks had increased the debt burden and weakened debt affordability.
Recent data underscores these concerns.
New Zealand’s annual inflation rate remained unchanged at 3.1 per cent in the first quarter, remaining above the central bank’s target range and raising the possibility of further rate hikes in late 2026.
In March, Fitch downgraded New Zealand’s outlook to negative from stable, citing increasing difficulties in reducing debt due to delayed fiscal consolidation.
