There is only a 'vague possibility' that New Zealand would escape a recession considering Europe's worsening debt crisis, according to the country's analysts.

The projection comes after ratings agency Standard & Poor's cut the credit ratings of nine European nations, which further creates trouble for Europe in its efforts to recover from its debt crisis.

Standard and Poor's cut France and Austria's AAA rating by one notch to AA+, scaled back its long-term ratings on Cyprus, Italy, Portugal and Spain by two notches and its ratings for Malta, Slovakia and Slovenia by one notch.

Massey University banking specialist David Tripe says the downgrades may have a significant impact on New Zealand's economy.

"Reduced European demand for Chinese exports, reduced European demand for exports from various other countries as well but particularly if we look at China and south-east Asia, those are important markets,'' Mr. Tripe said.

"That would push the exchange rate against the US dollar down, that would have an impact on increasing the relative prices of our exports and imports of course most notably oil.''

National Bank senior economist Sharon Zollner said it is certain that Europe was heading for a recession, New Zealand's fate in the ripple of aftermaths would largely depend on how other major economies outside Europe reacted.

"Can the US soldier on while Europe collapses? Can China soldier on? Europe is China's biggest export market and they are getting very concerned about the outlook for their exports," Ms. Zollner said.

"They have traditionally had an export driven model. Last time they filled the gap with a massive investment drive, but they have a limited capacity to do that again. They in their own way have spent their ammunition."

Zollner said the New Zealand economy has been coping well enough so far, as the economy is buffered by its diversified export markets and long-term structural factors influencing global food demand.

Immediate market response has yet to be felt Monday, but the currency markets show a different story.

The New Zealand dollar recently traded at 62.62 euro cents up from 61.23 cents on Friday.