S&P Leaves Japan Rating Unchanged as Abe’s Task Seen CriticalJames Mayger
Standard & Poor’s reaffirmed Japan’s credit rating, in the first verdict by an international ratings company on Prime Minister Shinzo Abe’s economic policies that have weakened the yen.
The sovereign, long-term credit rating was kept at AA-, the fourth highest level, with a negative outlook, S&P said in an emailed statement today. The company cut Japan’s rating in January 2011 and applied the outlook in the following month.
“We believe the measures adopted by the new Shinzo Abe administration at the beginning of its term will be critical if it is to arrest what we see as a prolonged decline in Japan’s sovereign credit standing,” S&P said in the statement.
The new government, elected in December, is trying to end entrenched deflation and revive the economy through monetary and fiscal stimulus. The yen has weakened almost 14 percent against the dollar and the Nikkei 225 Stock Average has risen more than 26 percent in the last three months, with companies including Nintendo Co. reporting higher income forecasts on the weaker yen.
“We would lower the ratings if we thought that government policies would be ineffective in ending deflationary pressures or in maintaining current rates of real economic growth,” S&P said.