Japan’s Debt Problems Continue

November 8, 2010 by · Leave a Comment
Filed under: Financial Crisis, The Rating Agencies 

It is anticipated that Japan’s ruling party’s poor showing in recent elections will lead to political gridlock that could thwart Japan’s efforts to gain control of the largest debt-to-GDP ratio in the industrialized world.

Standard & Poor’s is rating Japan long-term local and foreign currency debt AA, both with a negative outlook; however Moody’s and Fitch ratings are slightly more positive and are providing a stable outlook for both debts.

At the end of their fiscal year in March – Japan’s public debt was nearly twice the size of its economy, 883 trillion yen ($9,960 billion), or 192% of its GDP.

In comparison, Italy and Greece’s sovereign debt is estimated to be 115% of their economies, Germany’s is 72%, and the U.S.’s is 53%. The average for the world is 56% of GDP.

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