S&P Global Ratings yesterday upgraded its outlook on Australia’s “AAA” sovereign rating to “stable” from “negative,” citing the nation’s “swift economic recovery” from the COVID-19 pandemic-driven recession.
Australia’s A$2 trillion (U$1.55 trillion) economy has rebounded sharply to above pre-pandemic levels thanks to its successful handling of the pandemic, together with massive fiscal and monetary stimulus.
S&P said it was more confident now that the government’s fiscal deficit would narrow toward 3 percent of GDP during the next two to three years after reaching an estimated 10 percent deficit in the current fiscal year that ends this month.
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“The government’s policy response and strong economic rebound have reduced downside risks to our economic and fiscal outlook for Australia,” S&P said in a statement.
S&P added that its concern over Australia’s high level of external and household debt has been moderated by the nation’s strong track record of managing major economic shocks.
Australian Treasurer Josh Frydenberg welcomed the revised outlook, describing it as a “resounding expression of confidence” in the government’s economic management.
Australia is one of just nine countries in the world to boast an “AAA” credit rating from all three major ratings agencies.
It is among a handful of countries globally that can boast an economy that is larger now than before the pandemic.
On average, Australia’s rich world peers are 2.7 percent smaller than they were before the pandemic, research by Deloitte Access Economics showed, with the UK shrinking almost 9 percent, the EU contracting by 5 percent and the US 1 percent smaller.
Data out earlier showed Australia’s job advertisements climbed for a 12th straight month last month to reach their highest since 2008, prompting economists to predict the nation’s unemployment rate would fall to 4.4 percent by the end of next year from 5.5 percent now.
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