The Chinese rating agency Dagong Global Credit Rating Co. put the local and foreign currency sovereign credit ratings of the United States on a negative watch list on December 25, 2012.
The addition to the watch list is due to the ongoing U.S. debt crisis and political deadlock in Washington.
The debt burden of the U.S. Federal Government increased 9.1 percent year on year in 2011 and 11.7 percent in 2012, far exceeding the country's nominal GDP growth rate of 3.9 percent in 2011 and 3.4 percent in 2012, Dagong said.
Dagong said that it expected the outstanding debt of the United States to rise to 104.8 percent of its GDP and 608.7 percent of its fiscal revenue by the end of 2012, indicating that its solvency is experiencing a descending trend.
"Due to the pending fiscal cliff, the U.S. economy is likely to fall into recession in 2013 and stay weak in the long term, which will further weaken the material basis for the government to repay debt," Dagong said. |