Improvement in net foreign liabilities as a share of GDP makes the economy less vulnerable to shocks
A better balance between national saving and investment during the current economic expansion has helped contain the current account deficit and lowered the external debt ratio
“New Zealand has become less reliant on offshore funding over the past decade, and the maturity of bank borrowing has lengthened, reducing the risks from a potential funding shock”
Higher domestic saving and financing of investment augurs well for the durability of the current growth phase
External debt ratio “is still relatively high internationally, especially given our exposure to commodity exports”
Banks have begun to compete more aggressively for deposits and tighten lending standards, which should help alleviate offshore funding pressure
Lower NZD would help rebalance growth and Lower NZD needed to reduce debt further
NZD fell after the comments
Source: Bloomberg Pro Terminal
Trader - S. Fuchedzhiev
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