Australia holds onto triple-A credit rating
Standard & Poor's has reaffirmed Australia's triple-A credit rating just months away from the federal election.
The credit rating agency issued the annual rating despite a recent fall in the country's terms of trade and a steep decline in the dollar in recent months.
The dollar brushed US90¢ in recent weeks after spending the past couple of years trading near parity with the US dollar.
The stable rating has been maintained even after some deterioration in the country's public finances.
Australia remains one of just eight countries to have a triple-A rating from all three major credit-rating firms.
The main reasons for Standard & Poor's vote of confidence include Australia's public policy stability, economic resilience, and flexible fiscal and monetary policy.
A credit analyst from Standard & Poor's, Craig Michaels, said Australia had a "strong ability" to absorb large economic and financial shocks, "as was demonstrated during the global recession in 2009".
"[However], moderating these strengths are Australia's high external imbalances, dependence on commodity exports, and high household debt."
The ratings agency notes Australia's public finances have "worsened" in the past few years but the deterioration has been "more contained" than for many triple-A rated peers.
It also said it expects the government sector's budget balance to post "relatively small and declining deficits as a share of GDP". It expects the federal budget to be "broadly in balance" by 2016.
Economic conditions have softened in Australia in the last 12 months as mining investment growth slowed. The agency expects economic growth for the year to June 30 to slow to 2.6 per cent, down from 3.4 per cent in fiscal year 2012.
But things are expected to pick up in the next year as economic activity shifts away from the mining sector towards non-mining parts of the economy.
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