Fitch Ratings has affirmed Japan’s Long-Term Foreign Currency Issuer Default Rating (IDR) at ‘A’ with a stable outlook. In the statement, Fitch noted that the ratings ” balance the strengths of an advanced and wealthy economy, with high governance standards and strong public institutions, against weak medium-term growth prospects and high public debt.”
The rating agency projects GDP growth of 0.8% in 2019 despite an unexpectedly robust 2.1% in Q1. And, GDP growth is expected to lose steam through early 2020 from “weakening exports and industrial production.” Japan and other countries in the region are reeling from the effects of the “global trade downturn” associated with the escalation in the US-China trade dispute. And, a further escalation of global trade tensions could pose a “significant risk” to the outlook for Japan. Also, “recent imposition of export restrictions on Korea has increased geopolitical tensions”.