Summary: Japan

We believe the likelihood of an economic recovery in Japan strong enough to restore economic support for sovereign creditworthiness commensurate with our previous assessment has diminished. Over 2011-2014, average per-capita income in Japan slipped to US$36,000 from close to US$47,000. Apart from a sharp depreciation in the exchange rate between the yen and the U.S. dollar, this also reflected weak average economic growth during the period and persistently weak price trends. Despite showing initial promise, we believe that the government's economic revival strategy--dubbed "Abenomics"--will not be able to reverse this deterioration in the next two to three years. Our ratings on Japan balance the country's strong external position, relatively prosperous and diversified economy, political stability, and stable financial system against

...We believe the likelihood of an economic recovery in Japan strong enough to restore economic support for sovereign creditworthiness commensurate with our previous assessment has diminished. Over 2011-2014, average per-capita income in Japan slipped to US$36,000 from close to US$47,000. Apart from a sharp depreciation in the exchange rate between the yen and the U.S. dollar, this also reflected weak average economic growth during the period and persistently weak price trends. Despite showing initial promise, we believe that the government's economic revival strategy--dubbed "Abenomics"--will not be able to reverse this deterioration in the next two to three years. Our ratings on Japan balance the country's strong external position, relatively prosperous and diversified economy, political stability, and stable financial system against a very weak fiscal position that the country's aging population and persistent deflation exacerbate. Japan remains a relatively high-income economy despite...

Summary