Research Update: Australia 'AAA/A-1+' Ratings Affirmed; Outlook Stable

Sound fiscal metrics support our 'AAA' long-term sovereign credit rating on Australia. We expect the general government deficit to widen to 1.5%-1.7% of GDP over the next two years as government spending rises. We estimate the deficit was about 0.8% of GDP in fiscal 2024 (year ended June 30), with support from recent strength in commodity prices. Net general government debt is lower than that of most advanced-economy peers and will likely remain below 30% of GDP. Our ratings on Australia benefit from its strong institutional settings, wealthy and diversified economy, and monetary policy flexibility. External indebtedness is high but gradually improving. We affirmed our 'AAA' long-term and 'A-1+' short-term local currency and foreign currency sovereign credit ratings on Australia.

...- Sound fiscal metrics support our '###' long-term sovereign credit rating on Australia. We expect the general government deficit to widen to 1.5%-1.7% of GDP over the next two years as government spending rises. We estimate the deficit was about 0.8% of GDP in fiscal 2024 (year ended June 30), with support from recent strength in commodity prices. - Net general government debt is lower than that of most advanced-economy peers and will likely remain below 30% of GDP. - Our ratings on Australia benefit from its strong institutional settings, wealthy and diversified economy, and monetary policy flexibility. External indebtedness is high but gradually improving. - We affirmed our '###' long-term and 'A-1+' short-term local currency and foreign currency sovereign credit ratings on Australia. - The stable outlook on the long-term rating reflects our expectation that the general government deficit and net debt will remain modest over the next two years....

Research Update