Left Menu
Development News Edition

Fitch maintains US AAA rating despite coronavirus

PTI | Washington DC | Updated: 27-03-2020 03:11 IST | Created: 27-03-2020 03:11 IST
Fitch maintains US AAA rating despite coronavirus

Fitch Ratings on Thursday reaffirmed the United States's AAA credit rating, even with the country facing rising unemployment and a looming recession as the coronavirus pandemic exacts its toll. "The US sovereign rating is supported by structural strengths that include the size of the economy, high per capita income and a dynamic business environment," Fitch said.

The rating came as the Department of Labour reported unemployment claims surging to 3.3 million in the week ending March 21 after the pandemic caused many businesses to close. Fitch predicted that US GDP will shrink by about three percent this year, worse than during the global financial crisis in 2009, but the economy could recover in 2021 if the virus is contained.

The Senate passed a massive USD 2.2 trillion stimulus measure late on Wednesday, and expectations of its swift enactment pushed Wall Street to rally with the Dow closing up 6.2 per cent. "As fiscal and monetary policy effectively merge, government will spend in order to cushion the income losses suffered by households and businesses and lessen the destruction of potential output," Fitch said in its report, released after markets closed.

However it warned that the country's high deficits were set to get even worse thanks to the stimulus package's spending and the lack of political agreement to address the US's debt in the long-term. "The stimulus package has yet to be officially assessed for its budget impact, but at a conservative estimate, the federal fiscal deficit will rise to over 13 per cent of GDP in 2020 from 4.6 per cent of GDP in" fiscal year 2019, Fitch said.

Predicting government debt will rise to 115 per cent of GDP by the end of 2020, "This would put the debt ratio, absent consolidation, on course to surpass a level Fitch has previously considered inconsistent with 'AAA' status.".

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Download The Devdiscourse News App for Latest News.



Maritime transport post-COVID 19: Disruptions ahead in business models, techno-investments, regulations

Cargo shipping is a crucial part of the global supply chains and is likely to become more resilient along with efforts to make supply chains resilient but cruise liners could face much more disruptive changes....

Asia-Pacific response to COVID-19 and climate emergency must build a resilient and sustainable future

... ...


Latest News

Medtronic wins U.S. approval for ventilator, plans launch in May

Medical device maker Medtronic Plc said on Wednesday it has won the U.S. Food and Drug Administrations approval to immediately market its ventilator, which it plans to launch by May, to meet increased demand due to the coronavirus outbreak....

Starbucks sees sales impact from coronavirus stretching into end of 2020

Starbucks Corp said on Wednesday the financial hit from the coronavirus pandemic would extend into the final quarter of 2020, but added that it had no plans to cut its quarterly dividend.Starbucks also said it would temporarily suspend its ...

Yemen's Houthis launch ballistic missile at Yemeni city of Marib

Saudi state TV said early on Thursday that Yemens Iran-aligned Houthi movement launched a ballistic missile at the Yemeni city of Marib, hours before a ceasefire announced by the Saudi-led coalition takes effect.The Saudi-led coalition figh...

Mindhunter Season 3 trailer, release date, Why David Fincher needs more time for renewal

It has been around eight months since Mindhunter Season 2 dropped its finale, and thankfully Season 3 is currently under discussion. This proves that fans of Joe Penhall-created American crime thriller TV series are highly expected third se...

Give Feedback