Image caption Moody's had cut its outlook on the US credit rating in 2011 citing concerns over its budget deficit

Ratings agency Moody's has upgraded its outlook for the US credit rating, citing a declining budget deficit.

The agency lifted its outlook to stable from negative, as it affirmed the country's AAA rating.

It said the US economy was growing at a "faster rate compared with several AAA" peers and has demonstrated a "degree of resilience" to major reductions in the growth of government spending.

It added it expected the deficit to shrink further in the next few years.

According to the Congressional Budget Office, the budget deficit for the 2013 financial year is likely to decline to 4% of gross domestic product (GDP), down from 7% in 2012.

Moody's said the decline was greater than the fall it had anticipated when it cut the outlook on US rating to negative from stable in 2011.

The agency added that growth forecasts for the US economy for the next few years were "close to the long-term average for the decades before the financial crisis".

"These forecasts of accelerating growth are supported by a lower magnitude of fiscal tightening, continued strengthening of consumption and investment, and somewhat better international economic conditions," the agency said in its statement.

Last month, another ratings agency - Standard and Poor's (S&P) - also raised its credit outlook for the US economy from negative to stable.

S&P had also cited a resilient economy, monetary credibility, and the US dollar's status as the world's key reserve currency as being the key strengths of the US economy.

In August 2011, S&P downgraded its US rating one notch from AAA to AA+, but Moody's kept its rating for the US at AAA.