Fitch Ratings has revised the outlook on Japan¡¯s sovereign rating from stable to negative while keeping the rating itself unchanged, following a similar move last month by S&P Global Ratings.
¡°The coronavirus pandemic has caused a sharp economic contraction in Japan, despite the country¡¯s early success in containing the virus,¡± Fitch said in a statement Wednesday. ¡°Sharply wider fiscal deficits in 2020 and 2021, as we project, 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.¡±
The credit ratings firm affirmed the nation¡¯s A rating for long-term debt, but sounded alarms over recently rising COVID-19 case numbers and the possibility of further containment measures and risks to the economic outlook.
Tokyo set a record for new cases daily last week, prompting Gov. Yuriko Koike to ask residents to stay home over last week¡¯s long holiday weekend.
Japan has pushed up its tally of economic measures to combat the virus impact to around $2 trillion (?210 trillion), roughly 40 percent of the size of its economy.
Fitch projects Japan¡¯s economy will contract by 5 percent for the full year in 2020, before rebounding to 3.2 percent growth next year. But the firm didn¡¯t expect GDP to return to pre-pandemic levels until the fourth quarter of 2021.
The ratings report had little impact on the yen, which was trading at around 105.10 per dollar Wednesday morning in Tokyo.
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