S&P Affirms New Zealand’s AA+ Credit Rating, Predicts Stronger Growth
Last Updated on September 1, 2026
Ratings agency S&P has affirmed New Zealand’s AA+ foreign currency credit rating and kept its outlook stable, while forecasting the economy will grow 2.5 percent in the year to June 2026.
Finance Minister Nicola Willis, announcing the decision through Beehive.govt.nz, called it “a vote of confidence in both the economy and the Government’s management of the books.” She noted New Zealand is one of only 18 economies worldwide currently holding an AA+ rating or better.
What S&P looked at
In its review, S&P pointed to New Zealand’s monetary policy flexibility, its wealthy economy, relatively low net debt and strong institutions as key strengths. The agency said these factors offset weaknesses tied to external imbalances and ongoing fiscal deficits.
S&P also flagged a series of government actions it says are working to reduce the deficit and lift economic activity, including:
- Cuts to income taxes
- Streamlining of the public service
- Reversing the offshore oil and gas exploration ban to encourage foreign investment
- Reforms to the local government sector
The agency said it expects stronger growth to help narrow the government’s deficit over the next three years, a trajectory Willis says lines up with the Government’s own fiscal plan of gradually shrinking government spending relative to GDP, returning to surplus, and bringing down debt.
Why the rating matters
Willis said the significance of the S&P decision goes beyond symbolism, because ratings agency moves can shift financial markets. A downgrade, she said, would push up borrowing costs for both the government and everyday borrowers, an outcome the stable rating avoids for now.
“I know many people are still doing it tough, but S&P’s latest report is further evidence that Kiwis can look forward to a growing economy creating more jobs and the government’s books returning to surplus,” Willis said.
For Auckland households and businesses, the practical link runs through borrowing costs: a stable sovereign credit rating generally supports steadier conditions for government and, by extension, bank funding costs that feed into everything from mortgage rates to business loans. S&P’s outlook does not guarantee that improvement, but it removes one immediate risk of costs rising as a result of a downgrade.
Source: Beehive.govt.nz.
Photo: “t_2_tin dollar notes” by Allan Henderson, CC BY 2.0, via Openverse.
