Fitch retains negative outlook on Australian AAA

Via Fitch:

Fitch Ratings has affirmed Australia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘AAA’ with a Negative Outlook.

KEY RATING DRIVERS

Australia’s rating reflects its 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. 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.

The Australian economy has weathered the pandemic well compared with peers. Fitch estimates real GDP contracted by 2.8% in 2020, against a ‘AAA’ median contraction of 3.8%. This performance reflects successful virus containment and an effective fiscal and monetary response consistent with a policy framework that has underpinned the economy’s resilience to shocks over the medium term.

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Not that it remotely matters anymore in the age of QE.

David Llewellyn-Smith
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