Country Risk Service United States 2nd Quarter Updater

  • ID: 4564207
  • Country Profile
  • Region: United States
  • 21 Pages
  • The Economist Intelligence Unit
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The sovereign risk rating is unchanged at AA, although we expect it to be downgraded to A in the coming year. The government has passed major tax cuts that will erode its revenue base and has raised spending caps that will enable hundreds of billions of dollars of new spending. Consequently, the fiscal deficit will widen considerably in the coming years and the public debt/GDP ratio will rise further, from an estimated 77.5% of GDP in 2017.

The currency risk rating remains at A. During 2018-19 we expect the dollar to be supported by strong economic fundamentals in the US and the Federal Reserve (the central bank) continuing to tighten monetary policy. However, the currency remains vulnerable to a number of risks, such as disappointing domestic economic growth and possible shocks emanating from erratic policymaking.

The banking sector risk rating remains at A. US lenders have generally passed government-mandated stress tests, and the non-performing loan ratio continues its long-term decline as the economy continues to strengthen. However, the president, Donald Trump, is inclined to water down or remove many regulations governing the banking sector, which would boost profits but also be likely to weaken lending standards.
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Country Risk Service United States 2nd Quarter Updater

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

Central scenario for 2018-22: Political stability
Donald Trump and Russia: the fallout
1. Mr Trump sacks Mr Mueller but retains Republican support
2. Republicans ensure that Mr Mueller remains; legal stalemate ensues
3. Republicans ensure that Mr Mueller remains, but no "smoking gun"
4. Republicans ensure that Mr Mueller remains; Mr Trump resigns
5. Republicans ensure that Mr Mueller remains; Mr Trump is impeached

Central scenario for 2018-22: Election watch

Central scenario for 2018-22: International relations

Central scenario for 2018-22: Policy trends

Central scenario for 2018-22: Fiscal policy

Central scenario for 2018-22: Monetary policy

Central scenario for 2018-22: Economic growth

Central scenario for 2018-22: Inflation

Central scenario for 2018-22: Exchange rates

Central scenario for 2018-22: 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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