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Entries in Moody's (1)

Tuesday
Aug232011

Moody's Issues Credit Rating Downgrade for Japan

Comstock Images/Thinkstock(TOKYO) -- Japan is the latest country to be hit with a major debt downgrade.  Moody's has marked down the country's credit rating from Aa2 to Aa3, according to The Wall Street Journal.  

Despite a stable outlook, Moody's said "large budget deficits and the build-up in Japanese government debt since the 2009 global recession" was the reason for the downgrade.

Japan has suffered its share of troubles in recent months.  After coming through a devastating earthquake, tsunami and a nuclear crisis, the country must now work quickly to repair its debt woes.  But first, Japan will choose a new prime minister -- several others in the role failed to last more than a year, WSJ reports.

With the country's debt equal to more than 200 percent of the annual GDP, Japan's financial problems are far worse than the U.S., which is also facing scrutiny from ratings companies.  The U.S. debt is an estimated 75 percent of the GDP.

Japanese Finance Minister Yoshihiko Noda, a leading candidate to replace Prime Minister Naoto Kan, has expressed the need for tougher ways to cut down the country's debt.  Other candidates are not as clear about their expectations, WSJ reports.

There is uncertainty about whether or not Japan will raise taxes -- a move some Japanese leaders see as a possible threat to economic recovery.

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ABC News Radio