New Zealand offers investors comfort in recession

Wednesday 26th August 2009

New Zealand is one of the safer countries in the Asia-Pacific region for investors to do business, according to a new survey.

New Zealand is rated alongside Hong Kong at DB2c, where a DB1a is the highest rating, by Dun & Bradstreet’s Asia-Pacific Risk Indicator survey, below Australia and Japan, as one of the safest countries to invest in the region. No countries around the world have been rated higher than DB1d since the global credit crisis last year.

“New Zealand’s low investment risk has seen the kiwi dollar appreciate 25% since March” as the country’s economic and political environments provide a degree of stability, said New Zealand general manager John Scott.

“To keep our position in the top four safest countries, New Zealand’s regulators will need to ensure that their focus on reform and strong economic management continue.”

New Zealand fell into recession in the middle of last year, and Dun & Bradstreet expect the country’s economy to contract an annual 1.7%, with unemployment peaking “well above” 7% next year.

New Zealand’s banking system was one of the major features behind its relative stability in the region, after the Reserve Bank moved decisively to slash interest rates and introduce measures to maintain liquidity for the nation’s lenders, Scott said.

Still, weak household spending and rising joblessness will likely put pressure on the country’s trading environment, and Scott said businesses need to “tightly manager their operations” to mitigate future risks to the economy.

In April, D&B research found New Zealand companies were the sixth-worst in the region at promptly paying their bills as tight credit conditions forced firms to cling to their funds for as long as possible.

Businesswire.co.nz

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