Budget depends on strong growth: Moody's

A global rating agency warns it will be harder to get the budget back in shape if the change of leadership in Australia leads to policy uncertainty.

Moody's Investors Service recognises the removal of Tony Abbott as prime minister by Malcolm Turnbull is part of the democratic process, and in itself doesn't pose a risk to Australia credit rating.

Past leadership challenges in Australia haven't led to shifts in the economic or fiscal policy framework, it says.

But the change comes at a time when a multi-year period of strong growth has come to an end.

"It is not yet clear to what extent Australia's still competitive and flexible economy can develop sources of growth that offset the impact of weaker demand from China," Moody's associate managing director Atsi Sheth said in a statement on Tuesday.

If the change of prime minister leads to political and policy uncertainty or dampens business sentiment, it would add to the challenges facing the Australian economy.

"Without a return to strong growth, fiscal goals will be harder to meet," he says.