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New York-based global ratings agency Fitch, in a report issued Tuesday, says the outlook for the Canadian economy is stable.

DARRYL DYCK/THE CANADIAN PRESS

Fitch Ratings has affirmed Canada's triple-A credit rating and says the outlook is stable.

The New York-based global ratings agency, in a report issued Tuesday, said its assessment was based, among other factors, on Canada's political stability and track record of prudent fiscal management.

Meanwhile, it says the country's gross and net general government debt of 88.9 per cent and 84.4 per cent respectively of GDP for 2013 remains "well above the AAA median."

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Federal Finance Minister Joe Oliver, commenting on the report Wednesday, said the rating shows that Canada is "an island of stability in an uncertain global economy."

"I am pleased that Fitch Ratings confirmed our government's triple-A credit rating, with a stable outlook," Oliver said, adding the country's prudent fiscal management is "underpinned by our commitment to return to balanced budgets next year."

Fitch said that while Canada's public debt is forecast to decline and will stay within the tolerance of an 'AAA' rating under Fitch's baseline projections, "the high debt burden highlights its more limited fiscal space compared with rating peers."

However, it adds that "Canada's track-record of debt reduction in the past and ample domestic financing flexibility are important mitigating factors."

Meanwhile, Fitch notes that Canada's economic growth remains moderate and that the rebalancing of growth drivers from consumption and construction towards capital investment and exports has taken longer than previously anticipated.

Economic growth has been adversely impacted by slower U.S. growth, although structural impediments and lagging competitiveness are also hurting Canadian exports, it said, adding that rising external demand and exports would be important to get a renewed boost for investment.

Fitch forecasts Canada's economic growth will average 2.3 per cent "during 2014-2016" although "risks are on the downside as consumption growth has moderated and global economic prospects are uncertain."

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