ID :
183968
Tue, 05/24/2011 - 05:49
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Shortlink :
http://m.oananews.org//node/183968
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Japan Rating under Pressure from GDP Fall: Moody's
Tokyo (Jiji Press) - The Japanese economy's contraction in January-March at an annualized rate of 3.7 pct, in the wake of the March 11 earthquake and tsunami, put downward pressure on the country's sovereign credit rating, a senior Moody's Investors Service Inc. analyst said Monday.
Following a contraction in the country's gross domestic product in October-December 2010, the disaster "has resulted in two consecutive quarters of falling GDP and sent the economy into its third recession in a decade," Thomas Byrne, the major U.S. credit rating agency's senior vice president, said in a statement.
"These developments are credit negative in terms of their economic and policy effects," Byrne said.
Moody's currently gives Japan an Aa2 credit rating, the third highest grade, though it has already lowered the rating outlook to "negative" from "stable."
"Reconstruction and relief expenditures will eventually lead to a rebound in economic growth later this year and in 2012," Byrne said.
"But the scale of the loss in output and income caused by the earthquake may already have lowered the future growth trajectory of the Japanese economy, thwarting Japan's long-term growth rate," which is currently around one pct, he pointed out.
On the crisis at Tokyo Electric Power Co.'s <9501> Fukushima No. 1 nuclear power station in northeastern Japan that was set in motion by the quake and tsunami, Byrne said that an "uncertainty overshadowing Japan's fiscal outlook is the extent to which the government will share the burden of Tokyo Electric Power's rising earthquake-related liabilities."
"Should the rebound in Japan's economy be weaker than forecast or delayed entirely, additional actions by both the Ministry of Finance and Bank of Japan may be needed," he added.
Following a contraction in the country's gross domestic product in October-December 2010, the disaster "has resulted in two consecutive quarters of falling GDP and sent the economy into its third recession in a decade," Thomas Byrne, the major U.S. credit rating agency's senior vice president, said in a statement.
"These developments are credit negative in terms of their economic and policy effects," Byrne said.
Moody's currently gives Japan an Aa2 credit rating, the third highest grade, though it has already lowered the rating outlook to "negative" from "stable."
"Reconstruction and relief expenditures will eventually lead to a rebound in economic growth later this year and in 2012," Byrne said.
"But the scale of the loss in output and income caused by the earthquake may already have lowered the future growth trajectory of the Japanese economy, thwarting Japan's long-term growth rate," which is currently around one pct, he pointed out.
On the crisis at Tokyo Electric Power Co.'s <9501> Fukushima No. 1 nuclear power station in northeastern Japan that was set in motion by the quake and tsunami, Byrne said that an "uncertainty overshadowing Japan's fiscal outlook is the extent to which the government will share the burden of Tokyo Electric Power's rising earthquake-related liabilities."
"Should the rebound in Japan's economy be weaker than forecast or delayed entirely, additional actions by both the Ministry of Finance and Bank of Japan may be needed," he added.
