S&P downgrades Australia to negative

S&P Global Ratings has downgraded its outlook on Australia from stable to negatative as a result of the government’s stimulus measures.

The agency also reaffirmed its AAA/A-1+ long and short-term local and foreign currency ratings.

S&P said that it expects the government’s debt burden to weaken materially as a result of the stimulus and believes that Australia faces fiscal and economic risks that are “tilted toward the downside”.

“The COVID-19 outbreak has dealt Australia a severe economic and fiscal shock,” the ratings agency said.

“We expect the Australian economy to plunge into recession for the first time in almost 30 years, causing a substantial deterioration of the government’s fiscal headroom at the ‘AAA’ rating level.”

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