Fitch Affirms Australia at 'AAA'; Outlook...>

RATINGS: Fitch Affirms Australia at 'AAA'; Outlook Stable - Australia's 'AAA'

rating is underpinned by strong governance, high income levels, and a track

record of macroeconomic stability. Fiscal performance has improved in the past

year. The government has reiterated its commitment to achieving an underlying

cash surplus by FY21. On current projections, achieving this target is highly

sensitive to economic outcomes.

- Fitch forecasts a modest acceleration in GDP growth from 2.3% in 2017 to 2.7%

in both '18 & '19. Growth will be supported by higher non-mining private

investment & public infrastructure investment. Monetary policy is likely to

remain accommodative and supportive of growth over the next two years in the

absence of significant wage growth or inflationary pressures.

- Australia's heavy reliance on external funding leaves Australia exposed to

sustained shifts in capital flows and higher external financing costs

- High household debt poses a potential downside risk for the economic outlook

and financial stability. Housing-price growth has continued to cool on the back

of tighter credit standards, prudential regulation, and higher supply.