ANKARA – Global ratings agency Fitch has raised the US' outlook to "stable" from "negative," saying the revision reflects the government’s improved debt dynamics and increased revenues, which Fitch said it expects to expand by 19 percent in 2022.

"Fitch now forecasts a decline in the general government debt ratio to 113% of GDP (gross domestic product), from 118% in 2021 before beginning to rise again at a gradual pace in 2024," according to its latest forecasts.

A stronger-than-expected economic recovery has led public finances to outperform Fitch's expectations, it said, noting that taxes boosted revenues while pandemic-related spending has wound down.

The global agency projected that government deficit at 5 percent of GDP, down from an estimated 10.2 percent of GDP in 2021.

"State and local governments continue to perform well, and could result in an even lower general government outturn,” it said.

Fitch said it expected US growth of 2.9 percent in 2022, driven by consumption underpinned by continued labor market strength with solid growth in both employment and nominal wages.

However, it underlined that monetary tightening will cause a slowdown.

"High inflation will also begin to impact consumer spending," it said, adding that the economy will narrow in the second half of 2022 and into 2023, with below-trend growth of 1.5 percent in 2023 and 1.3 percent in 2024.

Fitch's 2022 and 2023 annual average inflation forecasts have risen to 7.8 percent and 3.7 percent, respectively.

The global ratings agency said it expects the Fed to hike rates at a more aggressive pace to around 3 percent by yearend, and 3.5 percent in the first quarter of 2023.

The country's headline consumer price inflation hit 8.6 percent year-on year in May, the highest since the early 1980s. (Anadolu)