UNITED STATES (OBSERVATORY) – International rating agency Standard & Poor’s revised its outlook on Japan’s ratings from “stable” to “positive”, indicating an improvement in the prospects for economic growth, writes Bloomberg.
The agency confirmed Japan’s long-term sovereign credit rating at “A +” level, short-term credit rating at “A-1” level.
Nominal growth of the economy, exceeding 2%, and negative effective real interest rates will allow to stabilize the debt load earlier than previously expected, S & P said.
At the same time, analysts of the agency warned that the forecast could again become “stable” if growth is weaker than expected, and the process of fiscal consolidation will slow down.
The national debt of Japan is one of the largest in the world, it is more than twice the size of the country’s economy.
Japan’s GDP in October-December grew for the eighth consecutive quarter. This is the longest period of growth since 1989. However, the growth rate has sharply decreased.
The slowest growth in Japan in two years and the strengthening of the yen emphasize that the country’s central bank still can not abandon the incentive program, which is becoming increasingly difficult to maintain.
Consumer spending in Japan in February fell by 0.9% in annual terms. This is the maximum drop since April last year. The data indicate that consumption can not stimulate economic growth if the tension in world trade hits Japan’s exports.
The increase in Japan’s current account surplus in February may be good news for the country’s finances, but not for its relations with the US.
“The current account balance of over 2 trillion yen is the level at which Japan is easier to become the target of attacks from the US against the backdrop of growing tensions in trade,” said chief economist Meiji Yasuda Life Insurance Co. Yuiti Kodama.
Most of the current account surplus is due to Japan’s income from abroad, including a significant amount of investment in the US, that US President Donald Trump should welcome. At the same time, Japan’s trade surplus with the US in February rose by 3.4% in annual terms due to strong export of cars. The surplus reached 631 billion yen.