Australia’s A$2 trillion ($1.55 trillion) economy has rebounded sharply to above pre-pandemic levels thanks to the country’s successful handling of the coronavirus pandemic together with massive fiscal and monetary stimulus.
S&P said it was more confident now that the government’s fiscal deficit will narrow toward 3% of gross domestic product during the next 2-3 years after reaching a 10% deficit in the year-ending June 2021.
“The government’s policy response and strong economic rebound have reduced downside risks to our economic and fiscal outlook for Australia,” S&P said in a statement.
S&P added its concern over Australia’s high level of external and household debt has been moderated by the country’s strong track record of managing major economic shocks.
Australian Treasurer Josh Frydenberg welcomed the revised outlook, describing it as a “resounding expression of confidence” in the government’s economic management.
Australia is one of just nine countries in the world to boast a ‘AAA’ credit rating from all three major ratings agencies.
Australia is among a handful of countries globally that can boast an economy that’s larger now than before the pandemic.
On average, Australia’s rich world peers are 2.7% smaller than they were before the pandemic, according to research by Deloitte Access Economics, with the United Kingdom shrinking almost 9%, the European Union contracting by 5% and the United States 1% smaller.
Data out earlier showed Australia’s job advertisements climbed for a 12th straight month in May to reach their highest since 2008, prompting economists to predict the country’s unemployment rate would fall to 4.4% by end-2022, from 5.5% now.