Fitch revises US outlook to negative from stable – Gulf Today

Fitch revises US outlook to negative from stable – Gulf Today

Fitch revises US outlook to negative from stable

2 hours ago

The photo has been used for illustrative purposes.

Ratings agency Fitch on Friday downgraded the outlook for the United States to negative from stable, warning of high debt and deficits made worse by the coronavirus downturn.

"The outlook has been revised to negative to reflect the ongoing deterioration in the US public finances and the absence of a credible fiscal consolidation plan,“ Fitch said in a statement.

The US is home to the world's worst coronavirus outbreak, which has caused tens of millions of layoffs and a historic 32.9 per cent collapse in GDP in the second quarter after businesses closed to stop the spread of COVID-19.

Though it expected the US would suffer a less-severe downturn this year than other comparable economies, Fitch said its decision to change its outlook reflected concerns of both mounting debt and policy gridlock.

"High fiscal deficits and debt were already on a rising medium-term path even before the onset of the huge economic shock precipitated by the coronavirus. They have started to erode the traditional credit strengths of the US,“ Fitch said.

The agency affirmed the US's AAA rating but said it expected government debt to hit 130 per cent