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Country Risk Service United States 2nd Quarter

  • ID: 2105460
  • April 2016
  • Region: United States
  • 21 Pages
  • The Economist Intelligence Unit
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After improving for six years, the fiscal deficit will widen in 2016 (October-September), as legislation has extended provisions to reduce corporate and individual income taxes. Interest charges will rise as the Federal Reserve (the central bank) increases the policy rate, but the increase will be far slower than in previous cycles and will not place a large burden on the fiscal accounts.

The currency risk score has worsened by two points, owing partly to an in-crease in inflation. The acceleration in price growth has reduced the real interest rate and weakened a previous form of support to the US dollar. Nevertheless, and despite its depreciation in the first quarter, we expect the dollar to remain strong against most currencies in 2016, the result of respectable economic growth, rising US interest rates and softness in many other economies.

Capital-adequacy ratios have risen and regulation has increased, which may make banks safer but will constrain profits. In 2015, for the first time since the financial crisis, all US lenders passed "stress tests". All 31 financial firms under scrutiny would maintain required levels of base capital in the hypothetical event of a "severely adverse" shock 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 2016-20: Political stability

Central scenario for 2016-20: Election watch

Central scenario for 2016-20: International relations

Central scenario for 2016-20: Policy trends

Central scenario for 2016-20: Fiscal policy

Central scenario for 2016-20: Monetary policy

Central scenario for 2016-20: Economic growth

Central scenario for 2016-20: Inflation

Central scenario for 2016-20: Exchange rates

Central scenario for 2016-20: 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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