Moody's rates Australian economy an upbeat AAA

Photo / Richard Robinson

Moody's Investors Service has given the Australian economy an upbeat assessment and says its currency's rating remains stable.

"Australia's AAA ratings are based on the country's very high economic resiliency, very high government financial strength and very low susceptibility to event risk," Moody's said yesterday.

The stable currency rating comes even though the Australian dollar has fallen more than US10c in the past two months.

Moody's acknowledged that the currency's fall was caused by a rally in the greenback after Federal Reserve chairman Ben Bernanke said the US central bank could soon start to scale back its economic stimulus.

Australia has avoided a recession in recent years, despite the global financial crisis hitting its major trading partners hard.

One of the reasons for the continued economic growth is the mining and resources boom, driven by exports to China.

Moody's also said the economy's diverse nature was one of its strengths.

"As one of the world's most advanced economies, the country has not only a significant natural resources sector - including minerals, hydrocarbons, and agriculture - but also well-developed manufacturing and service sectors.

"While volatilities in commodity prices and exchange rates affect the economy, the most important risk remains the economy's reliance on external capital inflows to finance the country's high level of investment, lately dominated by the resources sector, but including residential construction."

The ratings agency said the federal Government's strong financial position enabled it to give the economy some help during the global crisis.

"Moody's assesses the Government's financial strength as very high. Among the advanced economies, Australia has one of the lowest general government debt levels, although its debt has risen in the past several years."

- AAP