Australia

This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile Governments been willing and able to implement reforms to sustain economic growth and sound public finances through economic cycles. High commodity prices and nominal GDP growth aid strong public finances. General government deficit to average less than 1% of GDP over 2024-2027. Low net general government debt. High income and diversified economy support the ratings. Monetary policy and flexible exchange-rate regime remain key strengths. Elevated external debts and volatile export prices weigh on credit support. Strong fiscal accounts provide Australia with a substantial buffer to withstand a potential economic slowdown. We forecast real GDP growth of 1.2% for fiscal 2024 (year-end June 30),

...Strong fiscal accounts provide Australia with a substantial buffer to withstand a potential economic slowdown. We forecast real GDP growth of 1.2% for fiscal 2024 (year-end June 30), down from 3.1% in fiscal 2023. The slower growth is due to higher interest rates, which is pulling back consumption and investments. Tailwinds from low unemployment, elevated commodity prices, and high nominal GDP growth should keep fiscal accounts robust during this period. We forecast the general government deficit (including Commonwealth and subnational governments) will be less than 1% of GDP over fiscal years 2024-2027. As such, net general government debt could fall to 25% of GDP. The general government deficit could average just 0.4% of GDP in fiscal years 2023-2024, down from a peak of about 8.6% at the height of the pandemic in fiscal 2021. This is due to an unprecedented windfall from commodity prices and low unemployment. Our fiscal forecasts include tax cuts due to commence on July 1, 2024. Recently...

Full Report