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Country Risk Service United States 2nd Quarter Updater

  • ID: 4564207
  • Country Profile
  • May 2020
  • Region: United States
  • 19 Pages
  • The Economist Intelligence Unit
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The sovereign risk is AA-rated, but downside risks have risen sharply as a result of the coronavirus pandemic. The Economist Intelligence Unit now forecasts that real GDP will contract by 3.5% in 2020, as the measures needed to curb the virus cause a spike in unemployment. Record amounts of fiscal and monetary stimulus should help to avoid a financial crisis. The fiscal deficit will exceed 13% of GDP, but the US is able to meet its debt obligations.

Currency risk is A-rated. The US dollar is forecast to continue to appreciate against a trade-weighted basket of currencies in 2020, as the global economy enters a deep recession, sending investors scrambling for US dollars. We expect the dollar to depreciate slightly in 2021 as the global economy begins to stabilise and the coronavirus threat eases gradually.

Banking sector risk is A-rated. Major US lenders have significantly improved their resilience to financial sector shocks since the 2008-09 crisis. Yet the coronavirus has caused consumer demand to collapse, significantly increasing the risk of a wave of corporate defaults. For now, we believe that the unprecedented capital injections from the government and the Federal Reserve (the central bank) will keep the recession from spilling over into a financial crisis.
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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 2020-24: Political stability

Central scenario for 2020-24: Election watch

Central scenario for 2020-24: International relations

Central scenario for 2020-24: Policy trends

Central scenario for 2020-24: Fiscal policy

Central scenario for 2020-24: Monetary policy

Central scenario for 2020-24: Economic growth

Central scenario for 2020-24: Inflation

Central scenario for 2020-24: Exchange rates

Central scenario for 2020-24: 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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