Moody's says Australia's economic strength supports triple A rating despite risks

Moody's latest on Australia: Australia's very high economic strength supports Aaa rating, despite exposure to housing and external financing shocks

The report constitutes an annual update to investors and is not a rating action.

Pluses:

• Sustained GDP growth at robust levels, even as the economy is adjusting to lower commodity prices


• A very strong institutional framework


• Australia's monetary policy and banking regulations would most likely respond effectively to the potential economic and financial stability risks faced by the country


• Australia's government debt burden is moderate relative to similarly rated peers

Minuses:

• Moderate nominal GDP growth continues to weigh on revenues


• Splintered Senate makes passing budget consolidation measures politically challenging


• As a result, the gross debt burden of the general government will rise to 41% in fiscal 2017 (the year ending 30 June 2017) from 36.1% in fiscal 2015.


• Australia faces two types of shocks, ...  high and rising household debt exposes the sovereign to the risk of a potential downturn in the housing market ... second potential shock relates to the public and private sectors' long-standing dependence on external financing which exposes the economy and financial system to a shift in foreign investors' assessment of the attractiveness of Australian assets

Moody's says Australia's economic strength supports triple A rating despite risks
Moody's says Australia's economic strength supports triple A rating despite risks
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