WASHINGTON: US deficits and debt are likely to rise in the Donald Trump administration but there is no immediate risk to the top US debt rating, the Fitch ratings agency said Wednesday.
The president-elect, whose Republican party currently controls both houses of Congress, is expected to cut taxes, increase infrastructure spending and ease regulations, providing a short-term growth boost, Fitch said in a statement.
However, Fitch warned that Trump policies pose a risk of protectionism, which could harm the economy over the medium term.
Increased debt through 2018 could put pressure on creditworthiness but the US should retain its AAA rating, given the government’s “unparalleled financing flexibility” and because the dollar remains the global reserve currency.
Planned tax cuts should allow the world’s largest economy should grow by 2.2 percent in 2017 although policy uncertainties could hamper growth in investments by businesses.
“Policy outcomes are uncertain at this early stage, with Congress potentially more hawkish on the fiscal deficit than the president-elect,” Fitch said.