DBRS Inc. on Friday confirmed its AAA credit rating on the government of Canada, on the strength of a robust economic recovery. The trend is stable.
In a new report, the Toronto-based rating agency says that Canada’s recovery, “has recently accelerated and become more broad-based.” The short-term growth outlook is positive, amid “robust foreign demand and strengthening business confidence,” the report says
According to the report, risks to the economy include uncertainty over U.S. trade and tax policies, high levels of household debt, and overheated housing markets, particularly in Toronto and Vancouver.
The AAA rating is also supported by Canada’s strong public finances and sound fiscal management, the report adds, and public debt ratios are expected to decline over the next five years.
“With a strong public balance sheet and substantial financing flexibility, Canada has fiscal space to provide temporary support to the economy if downside risks materialize without putting stress on the ratings,” the report says.
The report also notes that fiscal and monetary policies are expected to gradually tighten as spare capacity in the economy diminishes.