S&P joins Fitch in affirming US amid virus outbreak, says debt, deficit to worsen

The rating agency expected economic recovery in 2021

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Global credit rating agency S&P Global Ratings on Thursday affirmed the United States' sovereign credit ratings at 'AA+/A-1+' with a stable rating outlook, amid the coronavirus outbreak, joining Fitch Ratings, which affirmed the world's largest economy last week.

The U.S. government's debt and fiscal deficits are likely to worsen this year after the "economic shock" caused by the pandemic, S&P said.

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Big swaths of the U.S. economy have shuttered as state and local governments have ordered people to shelter in their homes to stop the virus' spread. Last week, the U.S. Congress passed a coronavirus rescue package of more than $2 trillion.

The rating agency added that it expected economic recovery in 2021, which will partly compensate the loss of output this year and will lead to a moderate fiscal improvement after a "sharp" rise in fiscal deficit and sovereign debt burden in 2020.

"We expect the U.S. economy to contract around 1.3% this year before recovering by 3.2% in 2021 and 2.5% in the following year," the rating agency noted.

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Last week, Fitch warned that even before the massive economic shocks caused by the spreading coronavirus, the nation's already high and rising debt and deficits were starting to erode its credit strengths.

The U.S. death toll from the coronavirus stood at over 5,800 on Thursday, with a total of 240,000 cases reported by states and counties, according to a Reuters tally.

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The government has urged Americans to follow strict social distancing measures ahead of a "tough two weeks" that could see at least 100,000 deaths from the outbreak.

(Reporting by Kanishka Singh in Bengaluru; Editing by Sandra Maler and Peter Cooney)