Standard & Poor's Ratings Services Friday affirmed its AA+ long-term sovereign credit ratings on the United States of America, but maintained its negative outlook due to political and fiscal risks.
In its latest statement, S&P said the AA+ rating, the second- highest level in the S&P rating system, reflected its view of the strengths of the U.S. economy and monetary system, as well as the U.S. dollar's status as the world's key reserve currency.
S&P said that the U.S. economy is highly diversified and market- oriented, with an adaptable and resilient economic structure, all of which contribute to strong credit quality.
The rating agency also believed that the U.S. Federal Reserve has an "excellent ability and willingness" to support sustainable economic growth and to attenuate major economic or financial shocks.
However, considering the fiscal performance, debt burden, and recent decline in the effectiveness, stability, and predictability of the U.S. policymaking and political institutions, S&P maintained its negative outlook on the world's largest economy, which means there is at least a one-in-three chance to lower its long-term rating within two years.
Apart from these domestic factors, the rating agency also pointed out that the U.S. economic and fiscal performance remains subject to a number of significant risks, including ongoing fiscal and financial market dislocations in Europe, which could lower U.S. growth either through a decline in U.S. exports to the euro area or, more importantly, through second-round effects on the U.S. financial sector.
S&P forecasted in its statement that the U.S. economy will grow at an annual rate of 2 percent to 3.5 percent through 2016. Without significant fiscal policy change, S&P said it expects U.S. net general government debt, as a share of the economy, to continue to increase after 2016. For the time being, S&P sees the U.S.'s risk of returning to recession at about 20 percent.
S&P downgraded the U.S. long-term rating from triple-A to AA+ for the first time in 70 years last August, which resulted in great turbulence in global financial markets. |