Australia also got a vote of confidence from Standard & Poor's which affirmed the resource-rich country's triple-A credit status, citing ample fiscal and monetary flexibility.
That makes it one of only 18 nations with a top rating, a dwindling club that recently saw the United States ejected.
"The stable outlook reflects our view that Australia's public finances will continue to withstand potential adverse financial and economic shocks, and our belief that the country's consensus in favor of prudent budgetary policies will remain in place," the agency said.
Still, it did note that Australia relied heavily on foreign capital to fund its banks and booming mining investment, while high household debt levels could limit economic growth.
Those issues were addressed by the Reserve Bank of Australia (RBA) in its semi-annual report on financial stability Friday, and overall it sounded quietly confident.
"The Australian banking system is considerably better placed to cope with periods of market strain than it was before the (2008) crisis, having substantially strengthened its liquidity, funding and capital position in recent years," the RBA said in its 70-page report.
"It has higher levels of capital, makes less use of short-term wholesale funding and makes greater use of deposits as a source of funding."
That was just as well as tensions on markets reached new heights on Friday, with shares and commodities tumbling as investors flew to the safety of US Treasuries.
Such was the air of alarm that the Group of 20 nations issued an emergency statement at meetings in Washington, pledging to take all action necessary to support global growth and deal with Europe's debt woes.
STAY PRUDENT
Such turmoil on markets is a major reason households and businesses in Australia have turned cautious on borrowing in the last couple of years, a point highlighted by the RBA.
"In such an environment of low credit growth it will be important that (banks) do not seek to imprudently expand their balance sheets by easing lending standards or by taking on excessive risk in unfamiliar markets or products," it said.
"In these circumstances shareholders may need to revise their expectations about the future growth in (bank) profits."
The central bank has remained doggedly upbeat on the outlook for the domestic economy, thanks in large part to still strong demand for Australia's commodities from China and India.
Prices for key resource exports like iron ore and coal have, so far, remained very high and should lift the country's terms of trade to a new record this quarter. That flood of money is funding a truly huge pipeline of resource projects which should support growth for years to come.
While markets wobble, oil giant Chevron Corp is expected to give the go ahead for its $25 billion Wheatstone liquefied natural gas project in Western Australia on Monday.
Earlier this week the RBA's deputy governor, Ric Battellino, highlighted the positives in a speech in New York arguing that the rise of China meant Australia could weather a weakening in the US and Europe.
Copyright Reuters, 2011