Australia's AAA rating not at risk from bushfires: S&P - Reuters
There are concerns for the Australian economy following the bushfires ahead of when the Reserve Bank of Australia meets as soon as next month, 4th Feb. The crisis is becoming increasingly political as the country looks at the causes and the government’s response.
The bushfire crisis will cost Australia $5 billion in direct losses and lop off 0.2 to 0.5 per cent from its economic growth, Westpac has estimated, with costs comparable to the 2009 "Black Saturday" fires in Victoria, which destroyed 2,029 homes while causing a far greater loss of life with 173 direct fatalities.
"That would put the cost in terms of insured and uninsured losses at around $5bn," Westpac said.
As of Friday, there have been 10,550 insurance claims lodged with an insured valued at $939 million, Westpac said, cautioning, "assessing the economic impact of disasters is always very difficult, particularly when the full extent of the damage is still unknown," it cautioned.
Australia’s pristine ‘AAA’ sovereign rating is not at “immediate risk”
Meanwhile, Reuters reported that Australia’s pristine ‘AAA’ sovereign rating is not at “immediate risk” from the fiscal and economic impact of bushfires raging across the country’s east coast, S&P said on Monday.
“We do not believe that these bushfires will affect credit metrics enough to trigger rating changes in the next one to two years,” said S&P Global Ratings credit analyst Anthony Walker.
Ratings on the east coast states of New South Wales and Victoria - the most ravaged by the fires - were also likely to be unaffected, S&P said.
“We believe there is capacity within our current ratings on the sovereign and state governments to absorb the fiscal costs, which are relatively small compared with their budgets,” Walker added.
AUD/USD slips back to sub-0.6900 area amid mixed trade/political sentiments