On Monday, June 7, S&P Global Ratings reformed its view on Australia’s AAA rating from negative to stable. It cites the nation’s rapid economic recovery from the coronavirus pandemic, which directed a recession.
The country’s A$2 trillion ($1.55 trillion) economy greatly bounced back, surpassing the pre-pandemic levels. This is due to Australia’s successful leadership in handling the struggles brought by COVID-19. This also happened to the government’s proper implementation of massive fiscal and monetary stimulus.
As a result, S&P is altering the outlook to stable. It also affirms their AAA/A-1+ long and short-term domestic and international currency ratings. In addition, it has been noted that the economic recovery was quick and robust, with a falling unemployment rate. As a result, it dropped from 7.4% in July 2020 to just 5.5% in April 2021. This will control the long-term economic scarring.
Earlier, data released shows that the country’s job advertisement soared for a 12th month in May, reaching its peak since 2008. This prompts economists to foretell the nation’s unemployment rate to subside from its current 5.5% to 4.4% by the end of 2022.
According to S&P, it is more assertive that the regime’s fiscal deficit will be narrowed to about 3% of the gross domestic product in the next 2-3 years after outstretching a 10% deficit until June 2021.
S&P has been curbed by its robust track record of supervising crucial economic breakdown. Hence, it also added that Australia’s high-rising external and household debt caught their attention.
Currently, nine countries hold an AAA credit rating from the three major rating agencies, and Australia still belongs on the line.
National Australia Bank Under Investigation
On Monday, National Australia Bank (NAB) is under investigation. Investigation suspects it of serious and occurring breaches of anti-money laundering and counter-terrorism laws. This incident started a concern regarding potential fines and higher compliance prices.
In a statement, the financial crime regulator said that there were serious concerns that require thorough investigation.
However, the committee is not yet considering a civil penalty order.
NAB is Australia’s third-largest lender. Its shares crashed by 2.6% this morning trade while the wider market had movements. The bank released a statement saying that it will continue to cooperate with the regulator.
Its chief executive stated that NAB has an important role in observing and communicating suspicious pursuits and maintaining the safety of the country, bank, and customers. However, he also added that they are aware of the need to improve their performance relating to these matters.