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Saturday 26th of February 2011
February 22, 2011    

Moody’s cuts Japan’s credit outlook

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by Kay Murchie

Moody’s Investor Services has lowered its outlook on Japan’s sovereign debt to “negative”.

The credit rating agency cited the country’s mounting debt worries for the downgrade.

Moody’s currently rates Japan’s Government debt at an Aa2 level.

Japan’s debt currently stands at almost twice the country’s annual economic output – this compares with 136.8% for Greece and 112.7%.

Japanese debt is the highest of any industrialised nation.

Last month, Standard & Poor’s (S&P) cut Japan’s credit rating from AA to AA-, the first time in nine years such measures had been taken.

Meanwhile, Moody’s said that the Government needs to take more action to cut borrowing levels and policies would probably not be able to “contain the inexorable rise in debt, which already is well above levels in other advanced economies”.

The news is another blow to Japan which last week became the world’s third largest economy after China knocked it off the second spot.

Japan has been hit by a fall in exports and weak consumer demand, while China has benefited from a manufacturing boom.

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