Is Japan at Risk of a Downgrade?
The COVID-19 pandemic and now Russia’s invasion of Ukraine have greatly increased the risks to the global economy. The task for Japanese policymakers is to navigate these challenges while pursuing fiscal consolidation in order to protect the country’s sovereign credit rating.
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SINGAPORE – Japan’s sovereign credit rating could fall one to three notches in the coming decade if the government does not implement a credible fiscal consolidation plan. This risk, which the ASEAN+3 Macroeconomic Research Office highlighted in its recent annual consultation report on the country, underlines the challenges facing Japanese policymakers at a time of mounting global economic turmoil.