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Country Risk Service United States 2nd Quarter

  • ID: 2105460
  • Country Profile
  • April 2017
  • Region: United States
  • 19 Pages
  • The Economist Intelligence Unit
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After improving for six years, the government deficit widened in fiscal year 2016 (October-September), as corporate tax revenue fell short of expectations. The Economist Intelligence Unit revised its forecast for the fiscal accounts fol-lowing the election of Donald Trump as president, and we now expect higher spending on defence and infrastructure, and lower revenue due to corporate and personal tax cuts. The debt burden will remain manageable, but the likelihood that a higher tax burden will be required in the long term has risen.

The currency risk score improved by one point in April 2017 as exports returned to growth on a year-on-year basis. Although yield differentials will favour the dollar in 2017-18, we believe that much of this is already priced in, which leaves the dollar vulnerable to disappointing economic growth and possible shocks emanating from erratic policymaking. Nonetheless, we expect the dollar to remain strong against the euro and the yen in historic terms.

Capital-adequacy ratios have risen and regulation has increased since the Dodd-Frank law was passed in 2010, which may make banks safer but will constrain profits. In 2016 all US lenders passed "stress tests". The 33 financial firms under scrutiny would maintain required levels of base capital even in a "severely adverse" scenario marked by falling economic output and share prices, along with soaring joblessness and inflation.
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Country Risk Service United States 2nd Quarter

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Sovereign risk
Current assessment
Rating outlook

Central scenario for 2017-21: Political stability

Central scenario for 2017-21: Election watch

Central scenario for 2017-21: International relations

Central scenario for 2017-21: Policy trends

Central scenario for 2017-21: Fiscal policy

Central scenario for 2017-21: Monetary policy

Central scenario for 2017-21: Economic growth

Central scenario for 2017-21: Inflation

Central scenario for 2017-21: Exchange rates

Central scenario for 2017-21: External sector

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

Foreign payment and liquidity indicators

External trade
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