2020.03.2704:22:00UTC+00Fitch Affirms U.S. Sovereign Ratings At 'AAA'

Fitch Ratings affirmed the sovereign ratings of the United States at 'AAA' with a stable outlook, citing its structural strengths.

However, the rating agency cautioned that high fiscal deficits and debt, which were rising even before the onset of the huge economic shock precipitated by the coronavirus - are starting to erode its credit strengths.

The U.S. has shut down parts of its economy to contain the spread of the disease, which is likely to cause a deep contraction centered on the second quarter of 2020 and a massive rise in unemployment.

"The risk of a near-term negative rating action has risen given the magnitude of the shock to the economy and public finances from the coronavirus and the commensurate and necessary fiscal policy response, particularly in the absence of a credible consolidation plan for the country's pre-existing, longer-term public finance and government debt challenges," the agency said.

According to Fitch, the U.S. economy would shrink by around 3 percent in 2020. If the virus is contained during the second half, Fitch expects real growth to recover strongly in 2021.

Congress is set to pass a $2 trillion stimulus package of revenue and spending measures. The degree to which the economy recovers and the extent to which the fiscal stimulus is eventually unwound will be key rating considerations, Fitch added.