Debt downgrade for Japan?

31 May 2011

Japan could be about to face a debt downgrade after its rating was put on review by Moody's Investors Service.

The move follows a rise in unemployment and factory production gains that were not as great as many had expected.

According to the ratings agency, Japan's debt burden is unlikely to be helped by weak policy response and poor growth prospects.

Joblessness in the nation increased from 4.6 per cent to 4.7 per cent across April, with output only rising by half that forecast in a Bloomberg News survey.

Speaking to the news agency, senior economist at Itochu Corporation Yoshimasa Maruyama said: "This means we're one step closer to a downgrade and it reflects how we haven't seen any political progress on fixing public finances."

It was recently reported that Italy could face a credit rating downgrade, after Standard and Poor's threatened to cut the country's A+ debt standing due to the fragility of the nation's centre-right coalition.

By Asim Shah

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