World

Fitch revises down Japan’s long-term outlook to negative

Bloomberg July 29 | Updated on July 29, 2020 Published on July 29, 2020

The coronavirus pandemic has caused a sharp economic contraction in Japan   -  REUTERS

Fitch Ratings revised down the outlook on Japan’s sovereign rating to negative from stable while keeping the rating unchanged, following a similar move last month by S&P Global Ratings.

The coronavirus pandemic has caused a sharp economic contraction in Japan, despite the country’s early success in containing the virus, Fitch said in a statement. Sharply wider fiscal deficits in 2020 and 2021, as we project, will add significantly to Japan’s public debt, which even before the pandemic was the highest among Fitch-rated sovereigns as a share of GDP.

The credit ratings firm affirmed Japan’s rating of A for long-term debt. But the company sounded alarms over recently rising Covid-19 case numbers in Japan, and the possibility of further containment measures and risks to the economic outlook.

Tokyo saw a new daily record in cases last week, prompting the capitals governor, Yuriko Koike, to ask residents to stay home over last week’s long holiday weekend.

Japan has pushed up its tally of economic measures to combat the virus impact to around $2 trillion, roughly 40 per cent of the size of its economy.

Fitch projects Japan’s economy to contract by 5 per cent for the full year in 2020, before rebounding to 3.2 per cent growth next year. But the firm didn’t expect GDP to return to pre-pandemic levels until the fourth quarter of 2021.

The ratings report had little impact on the yen, which was trading at around 105.10 per dollar Wednesday morning in Tokyo.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on July 29, 2020
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.