Australia has kept its triple-A credit rating and is expected to lower its budget deficit considerably as the country wraps up stimulus measures and its economy recovers from the COVID-19 downturn, according to U.S. credit rating agency, S&P.
The global authority in credit rating had anticipated that Australia would experience economic growth in the December quarter as state governments lifted restrictions in line with the growing vaccination rate, and after the 2021 lockdowns ended.
S&P also observed that the unemployment rate quickly bounced back to 4.2 percent in December, which the country has seldom achieved since 2008.
“We do not expect to see a large increase in spending initiatives that would substantially weaken fiscal accounts in the next budget or in the lead-up to the Commonwealth election,” S&P Global Ratings analyst Anthony Walker said.
“Nor do we expect further lockdowns to derail our expected fiscal recovery at the general government level either by weighing on projected revenue growth or resulting in material fiscal stimulus.”
Treasurer Josh Frydenberg said that Australia was among nine countries with a AAA credit rating endorsed by three major rating agencies. The other two organisations are Moody’s Investors Service and Fitch Ratings.
“Rating agency S&P Global has affirmed Australia’s AAA credit rating, citing Australia’s strong economic recovery from the pandemic and track record of sound economic and fiscal management,” Frydenberg said in a media release.
“Sustainable public finances is key to retaining our AAA credit rating and only the Coalition has a strong track record of fiscal discipline and repairing the Budget.”
Frydenberg also hinted that the federal government’s direct economic and health support during the pandemic boosted the confidence of households and businesses and allowed Australia’s economy to recover faster than other advanced economies.
“Since the onset of the pandemic, the Morrison Government has committed $337 billion, or 16.3 percent of GDP, in direct economic and health support,” he said.
“This has supported household and business confidence and spending at time of extreme uncertainty and helped ensure that Australia’s economy recovered sooner than any major advanced economy.”