Australia more likely than New Zealand to join ECR’s top-10
Australia’s superior credit ratings of Aaa compared to New Zealand’s Aa, according to both Fitch and S&P, is justified based on the latest assessments made by ECR’s contributors - but Moody's makes no distinction between them, rating both sovereigns Aaa.
The two countries have improved their risk rankings (become safer) in recent years, as they close in on ECR’s vaunted top-10 – an accolade Australia managed briefly in 2010/11.
Australia, now 12th in ECR’s global rankings, on a score of 81.6, has climbed three places since 2007. New Zealand, just one place below on 80.7, despite climbing six places during the same period, has slipped back two, and below Australia, since January. Its risk profile has been weighed down mostly by a lower score for government stability (although it still scores 8.2 out of 10 for that particular sub-factor).
While New Zealand, overall, has stronger political and structural risk profiles, Australia’s superior economic profile casts a shadow over its smaller neighbour. Australia has seen downgrades to three of its economic factors this year, while New Zealand’s have remained stable – all except for the government finances sub-indicator, which has improved. However, Australia’s economic assessment score is still 4.1 points higher than its neighbour.
According to the Organization for Economic Cooperation and Development, Australia is expected to grow by 3.1% this year – up from 2.2% last year – while New Zealand will only manage 1.9%, compared with 1.3% in 2011.
Australia’s fiscal metrics are similarly stronger. Its general government deficit of 2.2% of GDP and general government debt of 28.7% of GDP are predicted to be lower this year than New Zealand’s (-4.4% and 48.4%). And there are similar disparities with regards to unemployment and current-account deficits.
There can be no argument that Australia’s economy wins hands down, and for now it remains a slightly safer bet than its compatriot.
This article was originally published by Euromoney Country Risk.
Australia, now 12th in ECR’s global rankings, on a score of 81.6, has climbed three places since 2007. New Zealand, just one place below on 80.7, despite climbing six places during the same period, has slipped back two, and below Australia, since January. Its risk profile has been weighed down mostly by a lower score for government stability (although it still scores 8.2 out of 10 for that particular sub-factor).
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| Source: ECR |
While New Zealand, overall, has stronger political and structural risk profiles, Australia’s superior economic profile casts a shadow over its smaller neighbour. Australia has seen downgrades to three of its economic factors this year, while New Zealand’s have remained stable – all except for the government finances sub-indicator, which has improved. However, Australia’s economic assessment score is still 4.1 points higher than its neighbour.
According to the Organization for Economic Cooperation and Development, Australia is expected to grow by 3.1% this year – up from 2.2% last year – while New Zealand will only manage 1.9%, compared with 1.3% in 2011.
Australia’s fiscal metrics are similarly stronger. Its general government deficit of 2.2% of GDP and general government debt of 28.7% of GDP are predicted to be lower this year than New Zealand’s (-4.4% and 48.4%). And there are similar disparities with regards to unemployment and current-account deficits.
There can be no argument that Australia’s economy wins hands down, and for now it remains a slightly safer bet than its compatriot.
This article was originally published by Euromoney Country Risk.
