Fitch Ratings affirmed Australia's top notch credit rating on Friday, citing high income levels, strong governance and effective policy-making institutions.
The country's Long-Term Foreign- and Local-Currency Issuer Default Ratings was affirmed at 'AAA' and the outlook was kept at 'stable'.
"The country's economy has grown for 25 years without a recession, despite navigating a mining investment cycle and volatile global conditions, benefiting from the flexibility offered by a free-floating exchange rate, credible monetary policy framework and low public debt," the agency said.
Persistently high budget deficits have eroded Australia's fiscal strength relative to 'AAA' peers and policy measures introduced in the FY18 budget, if fully implemented, will help lower the deficit earlier than expected, Fitch said.
High household debt is a vulnerability for the economy and fiscal position, the rating agency noted.
A sustained reallocation of capital flows away from Australia by foreign investors could raise financing costs and put downward pressure on economic growth, the agency cautioned.
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