Australia could be hit with a ‘negative outlook’ to its Standard & Poor’s AAA credit rating within months, due to “poor fiscal performance”, Goldman Sachs has said.
The investment bank warned such a move would have consequences, even before a downgrade, after S&P updated its methodology, according to the Financial Review.
While Australia’s debt burden remained favourable, falling commodity prices and terms of trade, weak economic growth, and political impasse had reduced the federal budget by $283 million over the past 30 months. A further $55 billion deterioration in the federal budget was likely, the bank said, according to the AFR.
Yesterday, ratings agency Moody’s told The Australian Business Review that Australia’s rating was not yet at risk of downgrade due to political impasse over budget measures.
But that could change if the impasse continued through an economic downturn, Moody’s said.
“If government deficits widen over the medium to long term, and government debt ratios also continue to rise, Australia’s fiscal position would become less robust than it is now.”
source:theaustralian.com.au
STUDIO 3 NEWCASTLE AUSTRALIA 