The tight election outcome significantly increases the chance of Australia’s credit rating being downgraded and adds to the case for another interest rate cut, an economist says. The risk of a downgrade of Australia’s triple-A credit rating is high regardless of who forms government because of the uncertainty the election outcome poses for the budget, AMP Capital chief economist Shane Oliver told AAP on Sunday. “Ratings agencies may conclude whichever way it goes we’re going to end up with a worse budget outcome than was projected in the budget,” he said. “Then on top of that, the ratings agencies might conclude none of this is good for economic growth in Australia.” Business will not be encouraged to invest in this environment, leading to lower economic growth and weaker prospects of getting the budget under control, he said. Former treasurer Peter Costello has also warned the tight result and a possible hung parliament could lead to a downgrade of Australia’s triple-A credit rating.
