Australia’s AAA rating affirms sound finances and resilient economy

While global economic conditions are widely tipped to worsen in 2009, Australia is well-placed to ride the storm.

Standard & Poor’s yesterday affirmed Australia’s AAA credit rating reflecting its view that our government finances are “sound” and our economy “resilient”.

While Standard & Poor’s forecast that the government would report a cash deficit of about 1% of GDP in the 08/09 financial year, the ratings agency believes “this deficit does not materially alter the robust profile of the country's public finances”.

Standard & Poor’s also commented that while the slowing economy would increase banks’ problem loans, Australian banks should remain profitable, adequately capitalised and with good asset quality by international standards.