S&P on New Zealand’s CA deficit – if it doesn’t narrow could trigger for rating downgrade

Bloomberg (gated) carries the report, in brief:

• S&P Global Ratings is “broadly comfortable” with New Zealand’s sovereign rating outlook
• closely watching NZ large current-account deficit and weak economic growth
• New Zealand’s current account deficit was 6.8% of gross domestic product in the 12 months through March … among the widest of advanced economies, reflecting subdued exports, stronger-than-expected imports and debt servicing costs … “Our base case is that it will narrow to something like 5% of GDP over the next couple of years. But if it doesn’t, that’s going to be probably a downside trigger for the rating.”

New Zealand is currently rated AA at S&P, with a stable outlook (means it’s unlikely that the rating will change over the next two years)

This article was written by Eamonn Sheridan at www.forexlive.com.