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Fitch Retains Australia's Triple-A Rating; Outlook Negative

Fitch Ratings maintained Australia's sovereign ratings at 'AAA' citing strong institutions and effective policy framework.

However, Fitch said the 'negative' outlook on ratings reflects uncertainty around the medium-term debt trajectory following the significant rise in public debt/GDP caused by the response to the pandemic.

The economy is estimated to shrink 2.8 percent in 2020 compared to 'AAA' median contraction of 3.8 percent. The economy is projected to expand by 3.8 percent in 2021 and 2.7 percent in 2022.

The effective fiscal and monetary response has helped the economy to withstand the economic shock caused by the pandemic, the agency observed.

Due to government's fiscal stimulus measures, the general government deficit is expected to widen to 12.7 percent of GDP in the fiscal year ending June 2021. The general government deficit is forecast to fall to a still-high 6.4 percent of GDP in FY22, Fitch said.

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