"Due to COVID-19..." Canada's National Credit Rating Downgraded from AAA to AA+

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Canada’s national credit rating has been downgraded one notch from the highest level of 'AAA' to 'AA+' due to the impact of the novel coronavirus disease (COVID-19).

According to Bloomberg News on the 24th (local time), credit rating agency Fitch downgraded Canada’s national credit rating by one notch. Fitch explained that this decision was made as Canada’s fiscal deficit and public debt ratio are expected to increase this year.

Fitch projected Canada’s fiscal deficit this year to be 16.1% of its gross domestic product (GDP). The national debt is also expected to surge from 88.3% of GDP last year to 115.1% this year. According to the Canadian Parliamentary Budget Office, the fiscal deficit this year is expected to be 12% of GDP, a sharp increase from 1.1% last year.

In March, the Canadian Parliament passed an economic stimulus package worth 82 billion Canadian dollars (approximately 70.28 trillion Korean won) to respond to COVID-19, and it is reported that additional support measures are currently being prepared. Fitch explained, "The expansion of the fiscal deficit occurred as public consumption increased in response to the sharp decline in production caused by the suspension of economic activities to prevent the spread of COVID-19."

Canada’s national credit rating remains at AAA with other credit rating agencies such as S&P and Moody’s. Bloomberg described Canada as "the first country to lose the highest credit rating status due to COVID-19."

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