Moody's reaffirms Australia's ‘AAA’ sovereign credit rating despite surge in government debts

Moody's in its latest report reaffirmed Australia’s triple A sovereign credit rating despite an increase in government debts. The rating company said that the country's debt burden is no worse than other countries that hold the top tier rating.

In its regular update on Australia, it says the nation's strengths are its economic resilience in an uncertain global environment, a very robust institutional framework and a stronger budget position than many similar rated peers. It concedes the government will face political hurdles in implementing its fiscal tightening, as it rules with a very thin majority in the House of Representatives and a splintered Senate, reported perthnow.

It does warn Australia's high and rising household debt leaves the economy and banking sector vulnerable to negative shocks and remains vulnerable to a downturn in commodity prices and a slowdown in China, they added.

However, Moody's believes Australia's economic growth potential is higher than most top-rated economies. It believes the shift in economic activity from mining to services will lift GDP growth in the range of 2.5-3 percent from 2017 onwards.

Meawhile, the ASX200 index traded 0.28 percent down at 5,615.50 percent at 05:20GMT, while at 5:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at -103.56 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex