Fitch: Australia is one of the most resilient sovereign economies in the Asia-Pacific region

The uncertainty of the geopolitical environment continues to rise, with multiple external shocks occurring over the past few years, resulting in a continual contraction of credit buffer space for countries in the region. The baseline scenario anticipates that the Strait of Hormuz will resume navigation in July; if the current agreement is successfully finalized this week, this navigational status is highly likely to be maintained. The direct impact of energy price shocks alone on sovereign credit of various countries is expected to be relatively limited. As a net exporter of energy, Australia is among the sovereign entities in the Asia-Pacific region demonstrating stronger resilience to this shock. It is expected that the Reserve Bank of Australia will pause its interest rate hike cycle at this policy meeting to assess the effects of the previous three rounds of increases.