Fitch brushes off trade slowdown's impact on US

Tuesday, 02. April 2019 22:34

Fitch Ratings held on Tuesday its long-term grade for debt in foreign currency for the United States at AAA with a stable outlook. The credit appraiser highlighted the magnitude of the world's biggest economy as a firm structural foundation together with high per capita income and a dynamic business environment, but also pointed to Treasury debt's "deepest and most liquid asset market." Public finance benefits from issuing the dollar, the dominant reserve currency, and the US is "less exposed to slower trade growth than most of its peers," the report adds.

The agency's analysts noted the effects of the fiscal relief package from last year but also stressed belief the country's "debt tolerance to be higher than that of other sovereigns." Yet, they warned reforms "eventually" need to be implemented to prevent the increase in deficits and debt to "test these credit strengths." Fitch calculated primary spending is on the way to advance by 0.3 percentage points of gross domestic product in the current fiscal year and that general government debt would top 120% of GDP by 2028. The latter projection came in lower than in the previous update.

The US will grow more than "most advanced economies", the firm said. However, the forecast was lowered to 2.3% for this year and 1.9% for 2020.

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