International economics firm BMI has raised New Zealand’s political volatility rating, cautioning that the country’s politics are becoming “increasingly volatile” and that the government’s unity is facing pressure.
BMI evaluates countries’ political risk through a Political Risk Index, which aims to show whether a country’s political environment is more or less volatile.
The index is rated on a scale of 0 to 100, with 100 indicating the highest level of political risk.
In mid-2023, New Zealand’s score on the index was 16, which increased to 18.3 by November this year. This indicates that although New Zealand’s political risk has risen, the country is still regarded as stable.
Prime Minister Christopher Luxon rejected the report, saying that the government was “very united.” He pointed out that instability was common in other countries with proportional representation.
In a statement, BMI referenced a recent Ipsos poll revealing government confidence ratings at historic lows, along with circulating rumours of a coup against Prime Minister Luxon.
According to the note, “New Zealand’s political environment has become increasingly volatile.”
“While this tripartite arrangement delivered a strong mandate in the 2023 general election, managing ideological divergences has proven more challenging than we anticipated.”
BMI, owned by global credit ratings agency Fitch, operates independently from Fitch’s ratings team. Therefore, BMI’s analysis does not affect the government’s credit rating with Fitch.