S&P lifts Aussie rating outlook to stable
SYDNEY: Global ratings agency S&P raised its outlook on Australia’s “AAA” sovereign rating yesterday to “stable” from “negative”, citing optimism about the government’s ability to return the country’s finances to surplus by the early 2020s.
After a decade of deficits, Australia’s centre-right government has said it would turn a small budget surplus next year and 2020.
Australia is one of only 10 nations in the world with a “AAA” credit rating from the top three agencies.
The deteriorating government finances was one reason S&P had put Australia on a “negative” watch in mid-2016.
Since then, Australia’s A$1.8 trillion (RM5.4 trillion) has continued to expand and last quarter marked 27 years without a recession, helped by strong resources exports and rapid population growth that fuelled demand for homes and infrastructure.
The country’s labour market has also enjoyed a job surge since early last year, sending the unemployment rate lower to 5.3 per cent from a peak of 6.4 per cent in 2014 while the once-booming housing market was slowly cooling amid stricter regulatory lending restrictions.
“We expect steady government revenue growth supported by the strong labour market and relatively robust commodity prices, to be accompanied by expenditure restraint,” said S&P.
The ratings agency said it expects a continued “orderly unwind” of property prices with no harmful effects on consumer spending or on the financial system.