From Bloomberg: New Zealand's Credit Rating Reduced to AA by Fitch on High Debt Level. New Zealand's credit rating was cut one step to AA by Fitch Ratings, which cited the southern Pacific nation's high level of debt and persistent current account deficit. The outlook is stable after the rating was reduced from AA+, Fitch said today in a statement. Yields on 10-year notes rose two basis points, or 0.02 percentage point, to 4.31 percent. New Zealand's dollar erased an earlier gain versus its U.S. counterpart, slumping 1.3 percent to 76.70 U.S. cents. The country's 83 percent net debt to gross-domestic-product ratio in U.S. dollar terms at the end of last year compares with 10 percent for the median of AA rated nations, Fitch said. The current account deficit, or the amount of imports that exceed exports, is likely to widen to 4.9 percent in 2012 and to 5.5 percent the next year, the firm said. "New Zealand's high level of net external debt is an outlier among rated peers -- a key vulnerability that is likely to persist as the current account deficit is projected to widen again," Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch, said in the statement. The country "remains well placed among the world's highly-rated sovereign credits." New Zealand's ranking was cut from AA+ in part because its domestic savings to investment ratio is unlikely to narrow, which is needed to reduce its current account deficit, Fitch said. The country's 150 percent household indebtedness relative to disposable income compares with 157 percent in Australia 116 percent in the U.S. The last sentence is telling !
Australian public debt is quite low in comparison to a lot of overseas countries. It's our private debt that is so large.
Doesn't Australia also have a persistent current account deficit? Edit: Ok yes we do. http://en.wikipedia.org/wiki/Balance_of_payments_of_Australia lol.
That's the flip side of all the capital inflows though so we wouldn't be as well off if that wasn't the case.
Our Government debt is around $140 Billion and is predicted by Labor to reach $250-300 Billion by 2013.
New Zealand economy is FAR worse than Australias - their debt is also over 8 times greater proportionatly than ours (We are sub 10% compared to NZ over 80%) so IMO no we will not be downgraded based on current information.
I am not sure of current figures - for that you need to ask Mr Swan ( he has all the answers), but according to Wikipedia in 2010 NZ public debt was 30% of GDP and Australia was at 26% of GDP. The national public debt includes the states. Big difference ? Not sure. http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt
Yeah the states get their own rating. Queensland got downgrade after the impact of all the cyclones and floods I think.
http://www.treasury.gov.au/documents/1496/PDF/01_Debt.pdf The above is slightly out of date (looking for some newer figures though I know Aus is below 10%). Basically Australia is ok atm but heading deeper into the debt trap as we speak.
This is not reveiwing house hold debt though this is national (government) debt. If we review household debt then yes Australia is amoungst the worst offenders on the debt binge.
Can you believe anything in the SMH now. Cant get anything right. Since when did NZ have AAA rating ??? It was AA+ down to AA
I think NZ has AAA with some agencies and AA+ with some other agencies? Like Belgium. Moody's gives NZ AAA for example. S&P, AA+. Dagong is AA+. http://en.wikipedia.org/wiki/List_of_countries_by_credit_rating
