S&P upgrades Australia’s economic rating from negative to stable

• S&P Global Ratings upgrades Australia’s coveted ‘AAA’ sovereign rating from negative to stable, cites the country’s “swift economic recovery”
• Australia’s $2 trillion economy has surged back to pre-COVID levels thanks largely to the management of cases within its borders
• The government’s fiscal deficit is expected to narrow toward 3 per cent of GDP over the next two to three years after reaching a 10 per cent deficit in the year ending June 2021
• Australia is one of just nine countries in the world with a ‘AAA’ credit rating from all three major ratings agencies
• Treasurer Josh Frydenberg calls the revised outlook a “resounding expression of confidence” in the government’s management of the economy

S&P Global Ratings has upgraded Australia’s coveted ‘AAA’ sovereign rating from negative to stable, citing the country’s “swift economic recovery” from the pandemic-led recession.

Australia’s $2 trillion economy has surged back to pre-COVID levels thanks largely to the management of cases within its borders as well as sweeping fiscal and monetary stimulus measures.

S&P said it is now more comfortable that the government’s fiscal deficit will narrow toward 3 per cent of GDP over the next two to three years after reaching a 10 per cent deficit in the year ending June 2021.

“The government’s policy response and strong economic rebound have reduced downside risks to our economic and fiscal outlook for Australia,” S&P said in a statement.

S&P also noted that its concerns over Australia’s high level of external and household debt has been moderated by the country’s strong track record of managing major economic shocks.

Treasurer Josh Frydenberg welcomed the revised outlook, calling it a “resounding expression of confidence” in the government’s management of the economy.

Australia is one of just nine countries in the world with a ‘AAA’ credit rating from all three major ratings agencies, and is among only a handful of countries that can boast an economy that’s larger now than before the pandemic.

According to research by Deloitte Access Economics, Australia’s richest peer nations are on average 2.7 per cent smaller than they were before the pandemic.

The United Kingdom has shrunk almost nine per cent, while the United States is one per cent smaller and the European Union has contracted by five per cent.