[Asia Economy Reporter Kwon Jaehee] The international credit rating agency Fitch has downgraded Japan's sovereign credit outlook. It cited the increase in government bond issuance and the expanding fiscal deficit due to economic policies responding to the novel coronavirus infection (COVID-19) as factors.
On the 29th, Fitch revised Japan's sovereign credit outlook for this year from 'Stable' to 'Negative.' Fitch forecasted that Japan's economy will contract by 5% compared to the previous year. Additionally, it predicted that Japan's GDP will not recover to pre-COVID-19 pandemic levels until the fourth quarter of 2021.
However, Fitch decided to maintain Japan's sovereign credit rating at 'A,' which corresponds to the 6th highest grade out of 21 levels.
Earlier in June, Standard & Poor's (S&P) also downgraded Japan's credit outlook from 'Positive' to 'Stable.'
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