New Zealand's economic prospects are stronger than many other countries with gold-standard credit ratings, New York-based ratings agency Moody's has said.
In a glowing report released on Wednesday, Moody's analysts reaffirmed New Zealand's Aaa credit rating, adding that the outlook for the credit profile was stable.
"High income levels, robust population growth and continued strong Asian demand for New Zealand's products and services, including dairy, tourism and education, support the country's very high economic strength," Moody's said in a report.
"Combined with effective institutions and policies, these credit strengths mitigate New Zealand's vulnerability to shifts in external funding or a turn in the housing market."
Predicting that the New Zealand economy would grow at 3 per cent in 2017, compared to its forecasts of 2 per cent for the average Aaa rated country this year, Moody's said New Zealand had the potential to continue to grow faster than its peers.
"Longer term, New Zealand's potential [gross domestic product] growth is higher than many Aaa-rated sovereigns. In particular, it benefits from a more favourable demographic profile than in most of its peers."
Moody's is forecasting that New Zealand would average growth of about 2.7 per cent between 2011 and 2020, faster than all of the countries it gives a Aaa credit rating aside from Singapore and Luxembourg.
While New Zealand's merchandise exports were more concentrated around agriculture than most developed countries, "New Zealand demonstrates some degree of diversity among individual groups of products within its largest segment of exports."
The economy reinforced healthy government finances, with Budget surpluses forecast and gross debt stable at only around 30 per cent of gross domestic product.
Moody's predicted that it expected "broad consensus on fiscal discipline will continue".
In March, Labour and the Green Party signed up to a joint set of Budget rules, pledging to run surpluses and cap debt.
Moody's did warn that New Zealand remained vulnerable from its reliance to external financing, while the banking sector was exposed to high levels of household debt.
"New Zealand's Aaa rating could move down over the medium term if a large external or domestic shock, perhaps stemming from a natural disaster, a housing market correction or a sharp fall in global trade, were to result in a sustained upward trend in government debt that was not reversed in the following years."