Wall Street Journal report:S&P warns strained Australian budget puts ratings at risk
From the Journal:
- Standard & Poor's Ratings Services has backed warnings by Australia's central bank that the federal budget would be vulnerable to a global economic shock, which could put the country's AAA rating at risk
S&P's sovereign analyst Craig Michaels:
- Australia's budget outlook has weakened sharply in the last six months
- Commodity prices have plunged
- Sliding prices of coal and iron ore, the country's biggest export
- Hurting economic growth, denting corporate profits, driving higher unemployment and eroding government tax receipts.
"If there is a significant external shock, it's very likely that that would have a significant budget impact like it did in the global financial crisis," Mr. Michaels told The Wall Street Journal.
Goldman Sachs recently calculated that Australia could lose A$500 billion ($390.6 billion) in national income in the next decade because of the drop in commodity prices, which includes a 50% drop in iron ore.
More here: S&P Warns Australia's Budget Under Pressure
And ... note:
Considering Australia's relatively low government debt, at about 20% of GDP, Mr. Michaels said there is no immediate threat to its AAA rating.
Not that that is going to stop the market from going on a run ...
AUD and Aussie bonds taking a hit
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And, hey ... for those who were with us yesterday .... big props to RBS ... RBS- conceivable ... rating agencies will threaten to downgrade Australia sovereign rating
