USA. Moody’s Lowers Forecast To Negative

The international rating agency Moody’s downgraded its outlook for the USA from stable to negative, but confirmed that the rating of the world’s largest economy remains at the prestigious Aaa level.

In a note accompanying the decision, the rating agency’s experts emphasized that “increasing downside risks to public finances and high interest rates prompted a revision of the forecast.”

Moody’s, which along with Standard & Poor’s and Fitch is one of the world’s three largest rating agencies, also said it expected the US government deficit to “remain high” and believes the split in the US Congress between Republicans and Democrats would make it “very difficult” to reach consensus on a debt control plan.

As is now common practice, the US Treasury Department immediately announced its “disagreement” with Moody’s decision to revise its US forecast downwards. “Our economy remains strong,” and “Treasury bonds are the safest asset in the world,” a Treasury spokesman said.

Meanwhile, another agency, Fitch, commented on the situation in the Italian economy, confirming the “beautiful country” rating at BBB with a “stable” outlook.

“Italy’s rating,” the agency said, “is supported by its large, diversified, high-value-added economy, its membership in the eurozone, and the strength of its institutions.” More specifically, Fitch forecasts a slight recovery in Italian GDP growth of 1% in 2024 and a further of 1.3% in 2025.