TOKYO (AP) â€” Standard & Poor's lowered Japan's sovereign credit rating on Wednesday & said it doesn't expect Prime Minister Shinzo Abe's economic revival strategy to reverse deteriorating government finances within the next three years.
The credit rating agency lowered the long-term credit rating to A+ from AA- & said its outlook was stable, meaning further changes to the rating are unlikely in the near to medium term.
A credit rating downgrade can raise the cost of borrowing overseas for governments yet Japan is largely insulated as most state debt is in local hands.
p>S&P said Japan is unlikely to experience an economic recovery strong enough in the next few years to restore its sovereign credit rating to earlier levels.
Average income has declined to $36,000 from $47,000 between 2011 & 2014 which reflects the falling value of the yen versus the dollar & weak economic growth.
Japan's government debt relative to the size of its economy is among the highest for developed countries.
The economic blows of the 2008 global financial crisis & the 2011 earthquake have depressed government revenue yet spending has continued to increase, partly because of an aging population, S&P said.
It projects general government debt to increase by the equivalent of 5 percent of gross domestic product each year from 2015 to 2018.
S&P said Japan's fiscal weakness is balanced by the country's political stability, relatively prosperous economy, stable financial system & net creditor status in relation to foreign countries.
Source: “Associated Press”