S&P backs Australia’s AAA credit rating
(26 September 2011 – Australia) Standard & Poor’s Rating Services (S&P) reaffirmed Australia’s AAA credit rating last week, due to the country’s sound financial sector.
The ratings agency also affirmed the country's short-term A-1+ rating and stable outlook, in a statement.
'The ratings on Australia reflect Standard & Poor's view of the country's ample fiscal and monetary policy flexibility, economic resilience, public policy stability and its sound financial sector,' credit analyst Kyran Curry said in the statement.
'These factors demonstrate Australia's strong ability to absorb large economic and financial shocks, such as the global recession in 2009.'
S&P commented that Australia’s reliance on external savings and commodity income to fund growth, its high household debt and emerging fiscal pressures associated with an aging population were moderating the financial strength.
'Australia has what we consider to be strains on its financial sector, compared to other highly rated sovereigns, reflecting its heavy external borrowings to partly fund investment in its mining sector.
'The high debt burden will constrain growth in domestic consumption over the next three years.'
But S&P said the economy had favourable prospects for sustained growth, while there remained strong demand for commodities from emerging Asia, particularly China.
Australia was likely to return to trend growth of 3.5 percent per year by 2013, S&P said.
'The ratings on Australia reflect Standard & Poor's view of the country's ample fiscal and monetary policy flexibility, economic resilience, public policy stability and its sound financial sector,' credit analyst Kyran Curry said in the statement.
'These factors demonstrate Australia's strong ability to absorb large economic and financial shocks, such as the global recession in 2009.'
S&P commented that Australia’s reliance on external savings and commodity income to fund growth, its high household debt and emerging fiscal pressures associated with an aging population were moderating the financial strength.
'Australia has what we consider to be strains on its financial sector, compared to other highly rated sovereigns, reflecting its heavy external borrowings to partly fund investment in its mining sector.
'The high debt burden will constrain growth in domestic consumption over the next three years.'
But S&P said the economy had favourable prospects for sustained growth, while there remained strong demand for commodities from emerging Asia, particularly China.
Australia was likely to return to trend growth of 3.5 percent per year by 2013, S&P said.
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