Fitch says North America sovereign ratings outlook stable in 2019

Author: Adam Button | Category: News

Fitch says US North American ratings stable in the year ahead

  • US high debt to be outweighed by extraordinary financing flexibility
  • Expect growth in North America to slow but remain above long-term potential
  • Fitch expects Fed to hike 75bps in 2019
  • Reduced uncertainty on NAFTA will benefit Canada in particular
  • Short term risk to US rating is tail risk of failure to lift debt limit
  • Over medium term a larger or more-rapid rise in US deficits could lead to negative ratings action
  • Democrat victory in House means less risk of further tax cuts
  • Action to mitigate impact on deficit of growing mandatory spending is also unlikely in US
  • General US government debt will climb further above 100% in FY2019 but not rapidly
  • Canada general govt deficits on a downward path although subject to risks from provinces

Nothing surprising here. The crunch will come in about 5 years when interest payments and entitlements really begin to squeeze.

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