Rating agency SP affirmed Japans AA1 sovereign debt ratings on Wednesday, citing its rich current account surplus and an expected gradual economic recovery from the COVID19 pandemic.
The global rating agency said its outlook for Japan remains stable, reflecting prospects the worlds thirdlargest economy will achieve average nominal growth of about 1.8 over the next four years.
Our rating on Japan reflects the countrys exceptional external position, prosperous and diversified economy, political stability, and savingsrich financial system, SP said.
Offsetting these factors are Japans very weak public finances, which are exacerbated by an aging population and persistently low inflation, it said.
The rating agency said Japans economy has weathered the pandemic without serious longterm damage, pointing to resilience in its job market that will see employment rebound relatively quickly as the pandemic fades away.
SP said it may lower the ratings if Japans economic growth persistently lags that of other major economies and a return to deflation puts longterm pressure on its fiscal health.
The countrys ratings may be raised, on the other hand, if the governments efforts to fix the countrys finances proceed significantly faster than anticipated, it said.
Japans economy is emerging from last years initial blow from the pandemic, though a resurgence in infections is clouding the outlook amid expectations that renewed curbs on activity will be imposed in some prefectures….