Ratings agency, Fitch, has revised down the outlook on Japan’s long-term foreign currency debt rating to negative from stable, citing the sharp coronavirus-induced domestic economic contraction.
Furthermore, the credit ratings firm affirmed Japan’s rating of A for long-term debt.
“We project that wider fiscal deficits in 2020 and 2021 will add significantly to Japan’s public debt, which even before the pandemic was the highest among Fitch-rated sovereigns as a share of GDP.” Bloomberg quotes the rating agency’s statement
The ratings agency projects Japan’s economy to shrink by 5% in 2020, before rebounding to 3.2% growth in 2021. However, the firm still doesn’t expect GDP to return to pre-pandemic levels until the fourth quarter of 2021.
Japan has pushed up its tally of economic measures to combat the virus impact to around $2 trillion, roughly 40% of the size of its economy.