Moody's: Australia's economic strength supports AAA rating despite risks

The latest review on the Australian economy published by the US-based ratings agency, Moody’s Investor Service, highlighted the country’s triple A rating remains intact, despite exposure to housing and external financing shocks.

Key Points:

Sustained GDP growth at robust levels, even as the economy is adjusting to lower commodity prices

A very strong institutional framework

Australia's monetary policy and banking regulations would most likely respond effectively to the potential economic and financial stability risks faced by the country

Australia's government debt burden is moderate relative to similarly rated peers

Moderate nominal GDP growth continues to weigh on revenues

Splintered Senate makes passing budget consolidation measures politically challenging

As a result, the gross debt burden of the general government will rise to 41% in fiscal 2017 (the year ending 30 June 2017) from 36.1% in fiscal 2015

Australia faces two types of shocks, ...  high and rising household debt exposes the sovereign to the risk of a potential downturn in the housing market ... second potential shock relates to the public and private sectors' long-standing dependence on external financing which exposes the economy and financial system to a shift in foreign investors' assessment of the attractiveness of Australian assets