Australia’s top triple-A rating appears secure despite high household debt and banks’ high reliance on foreign funding, Standard & Poor’s said on Wednesday.
The ratings agency said Australia’s economic resilience, which saw it dodge recession during the global financial crisis, was not just down to luck and its abundant mineral and energy resources.
While the economy had benefited substantially from mining, S&P said Australia had some robust credit fundamentals which supported its top-notch rating (unsolicited credit ratings AAA/Stable/A-1+).
These include a wealthy and open economy, strong institutions, and low public debt, it said.
But its report “Australia has more than luck to endure downside risks” noted the nation was not without some vulnerabilities, including any sharp slowdown in major trading partner China or a change in foreign investor sentiment.
“The economy holds a large amount of offshore debt, households retain substantial debt because of high house prices, and its banks are reliant on foreign investor funding,” S&P Associate Director Craig Michaels said.