US Debt Burden Projected to Reach 123 Percent of GDP by 2028, Fitch Says Deficit

JAKARTA - The United States government's debt burden is expected to continue to rise to 123 percent of gross domestic product or GDP by the end of 2028. Fitch Ratings believes that high fiscal deficits, large interest burdens, and continued debt growth still limit the US credit rating.

Anadolu Agency, quoted on Friday, August 14, said the US government's debt ratio was at 117 percent of GDP at the end of 2025. The figure has more than doubled the median of countries with an "AA" credit rating.

Fitch assessed that the US government has not taken any meaningful steps to address the large fiscal deficit. Spending pressures are also expected to increase in the coming decade as the number of elderly people increases.

The government deficit is projected to widen to 7.4 percent of GDP in 2026 and remain at that level in 2027. This figure is the highest among "AA" rated countries.

Efforts to reduce the deficit are also expected to be increasingly difficult because military costs and interest payments are increasing. Spending for Medicare and Social Security also continues to increase.

Fitch estimates the US will hit the official debt limit of $41.1 trillion around mid-2027.

Despite the debt burden continuing to rise, Fitch has maintained the long-term credit rating of the US in foreign currencies at the level of "AA+" with a stable outlook.

The ranking is supported by the size of the US economy, high per capita income, dynamic business environment, and financing flexibility because the dollar is still the world's main reserve currency.

However, high fiscal deficits, large interest burdens, and the government's continued debt growth remain factors limiting the rating.

Fitch expects the U.S. economy to grow an average of 1.9 percent in 2026 and 2027 despite higher tariffs, government spending cuts, tightening border controls, and increased policy uncertainty.

Fitch assessed the resilience of the US economy in the face of changing tariffs and oil price spikes as showing its ability to absorb shocks.

On the other hand, labor demand weakened and job creation slowed sharply in 2026.

Annual inflation is expected to average 3.4 percent this year, still above the Fed's 2 percent target. Fitch expects inflation to approach that target by the end of 2028.

Tariffs also contributed to the rise in core goods inflation. However, according to Fitch, the impact on consumer prices is more limited than initially estimated.