Fitch Ratings affirmed Thursday Australia's long-term foreign currency Issuer Default Rating at 'AA+' and the long-term local currency IDR at 'AAA+.' The agency also confirmed the country's short-term foreign currency IDR at 'F1+' and the country ceiling at 'AAA'. The outlook on the ratings were stable.

Fitch said, The backdrop of global recession, heightened investor risk aversion and credit rationing presents some risks to Australia's macroeconomic imbalances of persistent current account deficits, heavy net external indebtedness and elevated household debt to income burden.

However, the country' sovereign credit strength, which includes the government's long -standing fiscal prudence, and the underlying strength and conservatism of Australian banks, well developed financial markets as also free-floating exchange rates have helped to counter the risks arising from these macroeconomic imbalances, the agency said.

In the meantime, Fitch forecasts the current account deficit to widen to 6% of GDP this year from 4.2% last year. The agency also forecasts a 5% increase in the gross external debt and expects the net external debt to be 52% of GDP at the end of this year.

Moreover, the agency expects the Australian economy to shrink 1.6% in 2009.

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