S&P Global Ratings affirmed Australia’s AAA long‑term sovereign credit rating and A‑1+ short‑term rating on the day of publication, maintaining a stable outlook for the long‑term rating. The stable outlook reflects the agency’s expectation that the general government deficit and net debt will remain modest over the next two years. S&P projects the general government deficit at roughly 1.6% of gross domestic product for the next two years and expects net general government debt to stabilise at about 28% of GDP in fiscal year 2029, up from 12% in fiscal year 2019. The agency attributes this outlook to planned property‑tax increases and other savings measures intended to mitigate rising structural spending pressures. Real GDP growth is forecast to decelerate to 1.5% in fiscal year 2027 as higher interest rates dampen domestic sentiment. The Reserve Bank of Australia raised its policy rate at each of its first three meetings in 2026, bringing the rate to 4.35%. Annual headline inflation was 3.8% in the 12 months to June 2026, while trimmed‑mean inflation stood at 3.6%, both above the RBA’s target range of 2%‑3%. In the May 2026 budget, the Australian government announced tax and spending reforms, including curbs on negative gearing and changes to capital gains tax treatment, as well as a proposal to rein in forecast spending on the National Disability Insurance Scheme, which would save approximately A$38 billion over four years. S&P warned that it could downgrade Australia’s ratings if both fiscal outcomes and per‑capita economic growth perform materially below its forecasts. The agency also noted that external debt, net of public‑sector and financial‑sector external assets, is expected to average over 200% of current‑account receipts.