Ratings agency points to economic challenges

International ratings agency, Fitch Ratings has pointed to a slowing economy and raising unemployment as among the challenges confronting the re-election Liberal/National Party Coalition Government.

“We forecast the Federal government to reach an underlying cash surplus by next fiscal year. But a challenging economic environment poses risks to this outlook,” the company said in a post-election analysis. “The economy is slowing and the unemployment rate has inched up, which could weigh on fiscal revenues. A sharper economic slowdown could also lead to pressures for greater fiscal stimulus.”

“The likely continued need for cross-bench support in the Senate could limit the government’s ability to advance some of its policy priorities. This poses additional risks to the budget outlook and the government’s ability to tackle medium-term economic reforms,” the Fitch Ratings analysis said.

However, it said that it expected the re-election would bring broad party policy continuity in line with the fiscal priorities announced in the Government’s pre-election budget.