Govt spending won’t hurt Australia’s AAA rating: Fitch

This article is more than 12 months old

Jun 06, 2019 06:00 am

SYDNEY : Australia's coveted triple-A sovereign rating would not be threatened by increased government spending, Fitch Ratings said yesterday. This came as calls for fiscal stimulus got louder to help stave off a possible recession. Data out yesterday showed growth in Australia's A$1.9 trillion (S$1.8 trillion) economy slowed to a decade low last quarter, underlining the need for aggressive policy support.The central bank has responded to the slowdown by lowering its cash rate to a record low 1.25 per cent, putting some onus on the new government of Prime Minister Scott Morrison to do its part. Fitch Ratings' associate director Jeremy Zook said there was headroom for the government to increase spending, if needed.

"Right now, Australia is right in the middle of the AAA median in terms of debt-to-GDP (gross domestic product) ratio," Mr Zook said.

Economists say Mr Morrison should administer some fiscal stimulus in the coming months, rather than remain fixated on delivering Australia's first budget surplus in a decade.- REUTERS