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Household debt a risk for New Zealand - economist

Updated at 9:35 am on 3 September 2010

The chief economist at a major international credit ratings agency has drawn parallels between New Zealand and Spain, one of the European economies worst-hit by the global recession.

That's despite a new report from the International Monetary Fund praising the strength of New Zealand's government finances.

However Standard & Poors' chief economist David Wyss says New Zealand and Spain have similar problems - low government debt but highly indebted households.

Mr Wyss says New Zealand has benefited from its low profile on international markets and has not been grouped with Spain, but a recurrence of problems in the world economy could change that.

He says New Zealand needs to boost exports and pay back its lenders, or risk skyrocketing interest rates and a collapse in the currency.

The global financial crisis left Spain with much higher unemployment than New Zealand at close to 20%, and it has to pay much higher interest rates to borrow on international money markets.

Listen to report from RNZ economics correspondent

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