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Ratings agency Standard & Poor’s has warned Australia’s AAA rating would be threatened by plunging house prices, a sharp slump in China, or a sudden deterioration in investor sentiment about the nation’s debt.
In a report, entitled Australia has more than luck to endure downside risks, S&P said Australia was unique amoung its top-rated peers for a weak external position, caused by decades of current account deficits.
It added that household indebtedness had not been “tested in an environment of high unemployment for a long time”. Australia’s household debt has sharply risen in recent decades as mortgage loans soared.
Australia benefits from a wealthy and open economy and relatively low public debt, S&P also wrote.