S&P sees a 33% probability of Australian AAA rating downgrade

S&P Global Ratings is out with its latest review report on the Australian economy, hinting that there is1 in 3 chance of Australian AAA rating downgrade.

Key findings

“Spending to combat the virus economic impact.

Downgrading the outlook on the credit rating was not a reflection on the spending but that the government had greater debt.

Australia is not losing fiscal discipline, they are responding to an external shock that has hit the economy.

Not S&P's base case to lower the rating.

Expect Australia's fiscal position to weaken for the next two years but anticipated a rebound in 2022.”

Last Wednesday, S&P downgraded Australia's outlook to negative, citing large increases in deficits in the next two years.

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