Back
17 Dec 2013
Do not overlook risk of a downgrade in Australia
FXstreet.com (Bali) - Australia Mid-Year Economic and Fiscal Outlook is due for release at 1.30GMT, and judging by the pessimism surrounding a return to surplus (to regain surplus by early 2016-17 estimates scrapped), risks about a potential downgrade on the economy are on the rise.
Firstly, while the last economic update projects a $30 billion deficit for this financial year, MYEFO is expected to forecast a deficit much worse than that, at around $50 billion this financial year, with debt also set to deteriorate to $500 billion by 2016-2017 and beyond.
Consumer sentiment is vulnerable to suffer another blow, and the deterioration in the forecasts is something to be concerned about, as it may prompt potential downgrades by some rating agencies. Since Australia still enjoys a triple A rating, any further signs of weakness observed in the economy, only increases the odds for a potential downgrade in the near future, as to reflect current economic conditions.
Firstly, while the last economic update projects a $30 billion deficit for this financial year, MYEFO is expected to forecast a deficit much worse than that, at around $50 billion this financial year, with debt also set to deteriorate to $500 billion by 2016-2017 and beyond.
Consumer sentiment is vulnerable to suffer another blow, and the deterioration in the forecasts is something to be concerned about, as it may prompt potential downgrades by some rating agencies. Since Australia still enjoys a triple A rating, any further signs of weakness observed in the economy, only increases the odds for a potential downgrade in the near future, as to reflect current economic conditions.