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27 January 2010
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Japan gets negative outlook
The Wall Street Journal, Asia, Wednesday, January 27, 2010
Japan gets negative outlook – A credit-rating firm issued a warning to Japan’s new government about the country’s borrowing, threatening to downgrade the nation’s sovereign debt unless policy makers find a way to pull the economy out of its deflationary spiral while curbing public spending. The statement from Standard & Poor’s on Tuesday was the firs formal declaration of concern from a ratings company about Japanese borrowing in the months since investor began to raise questions about the sustainability of government debt, estimated to have reached the size of the country’s entire economic output for the year ending in March—the highest level in the industrialized world. S&P’s warning also smacks of a vote of no confidence in the four-month-old administration of Prime Minister Yukio Hatoyama, who took office amid high hopes of reforming Japan’s long-stagnant economy, but has since struggled to articulate a path to recovery. The agency specifically cited the new administration’s focus on social spending and a seeming lack of concern for Japan’s borrowing as a reason for its threat to knock Japan’s long-term sovereign debt a notch below its current double-A rating.
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