Dagong maintains sovereign credit rating for Australia

BEIJING -- Chinese credit rating agency Dagong Global Credit Rating on Friday announced that it will keep its local and foreign currency credit ratings for Australia at AAA and AA+ respectively, each with a stable outlook.

With the smooth transition of domestic government, a strengthening of the banking system, and a substantial drop in fiscal deficit, Australia's macroeconomic environment can maintain stability and local currency solvency will remain strong, according to Dagong.

However, the heavy external debt burden has weighed down the solvency of foreign currency and caused it to be slightly lower than that of local currency, the agency added.

In the short term, the weaker demand for iron ore in emerging Asian economies will affect Australia's mining investments and exports. Its high unemployment rate and slow wage growth will also have negative effects on consumption, according to Dagong.

The agency projected the country's economic growth rate in the fiscal year 2013-2014 and 2014-2015 at 2.5 percent and 2.2 percent respectively.

Given that the negative effect of the sluggish economy on Australia's fiscal balance will dissipate as the external economic environment improves and the domestic economic structure adjusts, the agency expects the government to reach its fiscal surplus target in the fiscal year 2016-2017 and the general government debt ratio to gradually reduce.