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

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.