Standard & Poor's has affirmed Australia's top-tier triple-A rating and expects the government's budget deficit to narrow substantially as stimulus measures finish, with the economy recovering from the COVID-19 shock.
The global credit rating agency expects economic growth returned to Australia in the December quarter as governments eased restrictions after the Delta variant lockdowns and in response to the improving vaccination rate.
It also noted unemployment recovered very quickly to 4.2 per cent in December, a level that hasn't been achieved regularly since 2008.
"We do not expect to see a large increase in spending initiatives that would substantially weaken fiscal accounts in the next budget or in the lead-up to the Commonwealth election," S&P Global Ratings analyst Anthony Walker said.
"Nor do we expect further lockdowns to derail our expected fiscal recovery at the general government level either by weighing on projected revenue growth or resulting in material fiscal stimulus."
Treasurer Josh Frydebberg said Australia remains one of just nine countries to hold a AAA credit rating from the three major rating agencies - the other two being Moody's Investors Service and Fitch Ratings.
