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Swan hails Australia economy as it keeps AAA rating

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(GlobalPost/GlobalPost)

Treasurer Wayne Swan on Friday hailed Fitch's decision to affirm Australia's AAA credit rating, saying it highlighted the economy's underlying strength.

The move means Australia, which survived the financial crisis without dipping into recession, remains one of a small group of nations that still has the coveted rating from all three agencies, including Standard & Poor's and Moody's.

"Why is all that important? Because the way some people are carrying on at the moment you'd swear that we were at the other end of the spectrum," Swan told the ABC.

"It's important because what they are judging here is the underlying strength of the Australian economy.

"Low public debt, strong public finances, low unemployment, lower interest rates strong investment pipeline."

In its report Fitch said it made its decision because the country had built up the capacity to absorb shocks thanks to low public debt, a free floating exchange rate and liberal trade and labour market.

"Australia has remained one of the strongest performing economies in the 'AAA' universe since the global financial crisis began," it said.

However, it added that while the mining and resources sector would continue to support the economy, there could be potential problems once the mining boom passes.

"Ultimately, the key longer-term challenge facing Australia is how the economy will respond when mining sector investment peaks and begins to turn down," it said.

"It is still too early to judge how the economy will perform once this stage is reached."

Fitch noted the government's decision to abandon its budget surplus but said its view was that the fiscal consolidation process has slowed down, not reversed course.

In December the ruling Labor party abandoned a vow to return the budget to surplus this year, with a slowdown in Chinese economic growth having a knock-on effect for Australia's crucial commodities sector.

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http://www.globalpost.com/dispatch/news/afp/130329/swan-hails-australia-economy-it-keeps-aaa-rating