Moody's Investors Service says that credit fundamentals in Australia (Aaa stable) remain robust, with moderate gearing in the corporate sector, a resilient banking sector, and sound macroeconomic trends all providing support. However, subdued commodities prices are beginning to challenge some sectors of the economy and some states. Moreover, risks related to elevated property prices and Australia's dependence on external financing remain.
"Australia's key economic metrics—including GDP growth and unemployment—will continue to outperform most developed economy peers," says Marie Diron, a Moody's Senior Vice President for the Sovereign Risk Group. "However, government debt will rise from around 35% of GDP for the fiscal year ended 30 June 2015 to 38% of GDP in the fiscal year ended 30 June 2018, which will limit the government's room to buffer against potential negative shocks through fiscal easing," adds Diron.
From Australia, on Thursday, NAB Business Confidence data was published. Latest NAB Business Conditions Survey showed that in Q1 2016, both business conditions and confidence eased modestly, to +9 and +4 index points respectively, but these are still solid outcomes particularly for business conditions, which remains well above long-run average levels. This result is not overly surprising, however, with the NAB Monthly Business Survey suggesting both conditions and confidence gained even more momentum late in the quarter – pointing to a non-mining recovery that is gaining traction and becoming more broad-based.
This week markets will be looking at:
CPI (Wednesday 3:30)
PPI (Friday 3:30)
