FX.co ★ S&P downgrades Japan's debt outlook amid coronavirus woes

S&P Global Ratings has recently lowered its outlook on Japan’s sovereign debt rating to stable from positive due to uncertainty over the country’s fiscal health and the coronavirus consequences.

"The fiscal position should improve materially once the outbreak recedes and economic growth returns. Nevertheless, we expect the fiscal deficit will remain relatively high” in fiscal 2021 through 2023," analysts at S&P stressed. In the first quarter of this year, Japan slipped into a recession for the first time in almost five years even before the government introduced a state of emergency due to the coronavirus in April. Overall, Japan's GDP shed 2.2% year-on-year in the first quarter. Interestingly enough, preliminary data indicated a larger decline of 3.4%. Economists expected the figure to total -2.1%. "Japan’s weak government finances have deteriorated further in fiscal 2020 owing to the COVID-19 pandemic," S&P said. Thus, Japan is now facing a real challenge and desperately trying to find a way to prop up the economy without losing control of its tattered finances.