Bangkok--3 Mar--Standard & Poor's
Initial government estimates of fourth quarter real GDP growth in 2009 of 1.1% over the third quarter have meant that Japan (AA/Negative/A-1+) has managed to eke out only a slow recovery since the global downturn, according to a report published today by Standard & Poor's Ratings Services. Furthermore, we expect Japan's GDP to grow around a modest 1.5% in 2010.
The main factor behind the current lackluster upturn is that increased public investment has failed to fill the gap in recovering, but still dampened, external demand. Net external demand has been the main driver of Japan's growth since midway through the past decade. The proportion of external demand peaked at 5.7% of GDP in the second quarter of 2008, an increase from 0.7% in the fourth quarter of 2002.
The report goes on to discuss the necessity for the implementation of more effective policies to deal with deflation in Japan. However, the fiscal flexibility of the government remains hamstrung by already bloated fiscal deficits and debt outstanding, while the Bank of Japan appears hesitant to take further measures, such as inflation targeting or increasing the liquidity supply.
The report, titled "Japan's Lackluster Recovery To Continue In 2010," is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com; under Ratings in the left navigation bar, select Find a Rating. Members of the media may request a copy by e-mail at
[email protected] or by phone at 81-3-4550-8411. The full report is available in Japanese on Standard & Poor's Research Online at www.researchonline.jp.
Media Contact:
David Wargin, New York (1) 212.438.1579,
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Analyst Contact:
Takahira Ogawa, Singapore (65) 6239-6342
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