ANKARA, July 10 — Global ratings agency Fitch has raised the US’ outlook to “stable” from “negative,” saying the revision reflects the government’s improved debt dynamics and increased revenues, which Fitch says it expects to expand by 19 per cent in 2022.
“Fitch now forecasts a decline in the general government debt ratio to 113 per cent of GDP, from 118 per cent in 2021 before beginning to rise again at a gradual pace in 2024,” according to its latest forecasts on Friday said.
A stronger-than-expected economic recovery has led public finances to outperform Fitch’s expectations, Anadolu Agency reported it said, noting that taxes boosted revenues while pandemic-related spending has wound down.
The global agency projected that government deficit at 5 per cent of GDP, down from an estimated 10.2 per cent of GDP in 2021. “State and local governments continue to perform well, and could result in an even lower general government outturn.”
Fitch said it expected US growth of 2.9 per cent in 2022, driven by consumption underpinned by continued labor market strength with solid growth in both employment and nominal wages.
However, it underlined, monetary tightening will cause a slowdown.
“High inflation will also begin to impact consumer spending,” it said, adding that the economy will narrow in the second half of 2022 and into 2023, with below-trend growth of 1.5 per cent in 2023 and 1.3 per cent in 2024.
Fitch’s 2022 and 2023 annual average inflation forecasts have risen to 7.8 per cent and 3.7 per cent respectively, according to Anadolu Agency.
The global ratings agency said it expects the Fed to hike rates at a more aggressive pace to around 3 per cent by year end and 3.5 per cent in the first quarter of 2023.
The country’s headline consumer price inflation hit 8.6 per cent year-on year in May, the highest since the early 1980s.
