Australia risks losing its top credit rating from Standard & Poor’s for the first time in more than two decades, Goldman Sachs Group Inc said.
Plunging commodity prices, weaker economic growth and government difficulties in passing legislation are expected to spur a further deterioration of the nation’s finances that could lead S&P to place its “AAA” sovereign rating on negative outlook, analysts Tim Toohey and Andrew Boak said.
Australia’s economy is struggling to navigate the end of a mining investment boom, a slowdown in China and a drop in federal government revenue that is the result of falling prices for key exports such as iron ore.
Goldman Sachs estimates that Australian Treasurer Joe Hockey will reveal a further A$55 billion (US$44 billion) hole in the government’s finances when he delivers the budget on May 12.
“The recent sharp decline in Australia’s terms of trade and domestic political impasse have combined to further aggravate long present external vulnerabilities and weigh further on Australia’s public finances,” Toohey and Boak wrote in a note to clients. “A continuation of the recent pattern of fiscal slippage has Australia on a path to potentially experience its first ratings downgrade since 1989.”
S&P has rated Australia “AAA” since 2003, when it increased its score by one level from “AA+.” Its ranking fell as low as “AA” when it was last cut in the 1980s and it remained at the third-highest investment-grade score for almost 10 years before it was boosted to “AA+.”
“The firm’s previously published views on the Australian sovereign still stand and we won’t be commenting further on the matter until after the federal budget is delivered,” Melbourne-based S&P spokesman Richard Noonan said yesterday.
Australia is one of just 12 nations to carry a “AAA” score at S&P, and one of just nine to also hold the same ranking at Moody’s Investors Service and Fitch Ratings.
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
An Indonesian animated movie is smashing regional box office records and could be set for wider success as it prepares to open beyond the Southeast Asian archipelago’s silver screens. Jumbo — a film based on the adventures of main character, Don, a large orphaned Indonesian boy facing bullying at school — last month became the highest-grossing Southeast Asian animated film, raking in more than US$8 million. Released at the end of March to coincide with the Eid holidays after the Islamic fasting month of Ramadan, the movie has hit 8 million ticket sales, the third-highest in Indonesian cinema history, Film
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue jumped 48 percent last month, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc and Nvidia Corp reported monthly sales of NT$349.6 billion (US$11.6 billion). That compares with the average analysts’ estimate for a 38 percent rise in second-quarter revenue. US President Donald Trump’s trade war is prompting economists to retool GDP forecasts worldwide, casting doubt over the outlook for everything from iPhone demand to computing and datacenter construction. However, TSMC — a barometer for global tech spending given its central role in the
Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in server chips, expects revenue to decline this year due to sagging demand for 5-nanometer artificial intelligence (AI) chips from a North America-based major customer, a company executive said yesterday. That would be the first contraction in revenue for Alchip as it has been enjoying strong revenue growth over the past few years, benefiting from cloud-service providers’ moves to reduce dependence on Nvidia Corp’s expensive AI chips by building their own AI accelerator by outsourcing chip design. The 5-nanometer chip was supposed to be a new growth engine as the lifecycle
RSS