Australia’s AAA credit rating has today been reaffirmed by Fitch, with Australia one of only nine countries to hold a AAA credit rating from all three major credit rating agencies.
In its report, Fitch notes that our economy “has weathered the pandemic well compared with peers”, pointing to Australia’s “successful virus containment” and an “effective fiscal and monetary response consistent with a policy framework that has underpinned the economy's resilience to shocks over the medium term”.
The report also reaffirms that our economic recovery is well underway, noting that “Australia's labour market appears to be on a stable path to recovery” and forecast “the positive momentum to persist, with unemployment averaging 6.2 per cent in 2021 and 5.6 per cent in 2022” while acknowledging that temporary government support continues to taper off.
This is underpinned by the creation of around 350,000 jobs in the last four months, the unemployment rate falling to 6.4 percent in January, and 94 per cent of the 1.3 million people who lost their job or were stood down on zero hours at the start of the crisis now back at work.
Fitch forecasts the Australian economy to expand by 3.8 per cent in 2021 and 2.7 per cent in 2022, “driven by robust consumption as households draw down high accumulated savings from government relief measures”.
With the help of the Government’s unprecedented economic support, Australian households and businesses have amassed an additional $240 billion on their balance sheets over the last year. More than $7 billion in tax cuts have also flowed through to around 11.5 million hard-working Australians.
Fitch’s outlook is complemented by the start of Australia’s vaccine rollout, which “should gradually ease these risks over the year and support domestic sentiment”.
With payroll jobs, business and consumer confidence also at pre-pandemic levels, Australia has performed better on the health and economic front than almost any other nation.
Our Economic Recovery Plan continues to support a private sector-led recovery by creating jobs, rebuilding our economy and securing Australia’s future.