S&P: Australia’s economy will move into recession by June 2020

Dhwani Mehta FXStreet

According to S&P Global Ratings, the Australian economy is seen moving into a recession by June 2020 adding that it will grow 1.2 % in 2020 before rebounding.

Key takeaways

That its ratings on Australia are not under immediate threat from the now likely technical recession.

Believe the ‘AAA’ rating on Australia can weather a temporary economic shock.

The country's strong fiscal position has provided it with some room to manoeuvre at the current rating.

We believe Australia’s economy will move into recession by June 2020 and grow 1.2 % in 2020 before rebounding.

Tolerance for further weakening at the ‘AAA’ rating level is diminishing.

Rating could come under pressure if weak economic conditions are more prolonged than we currently expect.

Stimulus package unlikely to strain Australia’s creditworthiness.

This comes after the Australian PM Morrison announced AUD 2.4 bln health package to combat coronavirus earlier today.

AUD/USD: Firmer above 0.6500

The Aussie extends the bounce above the 0.65 handle amid broad-based US dollar weakness while the AUD bulls also cheer the health package announced by Australia to fight the virus.

At the time of writing, AUD/USD trades 0.13% higher near daily highs of 0.6514.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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