Fitch Ratings affirmed Australia’s Long-Term Foreign-Currency Issuer Default Rating at “AAA” with a negative outlook. The rating reflects the country’s “strong institutions and effective policy framework, which supported nearly three decades of economic growth prior to the coronavirus pandemic and helped limit the severity of the current shock”
But the negative outlook reflects “uncertainty around the medium-term debt trajectory following the significant rise in public debt/GDP caused by the response to the pandemic.”
Fitch estimated that GDP contracted by -2.8% in 2020, versus “AAA” median of -3.8%. Economy is forecast to growth 3.8% in 2021 and 2.7% in 2022. It expects closure of international borders to persist until late-2021, which “dampened inward migration”. Trade tension with China “have not had a significant macroeconomic effect”, but remains a medium term risk.
