News Analysis: Experts divided on possible economic impact of Japan's catastrophic quake (3)

08:34, March 14, 2011      

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The disaster hit Japan when the government was struggling with its public debt burden, which doubles the gross domestic product (GDP), the highest among countries tracked by the Organization for Economic Cooperation and Development.

In January, Standard & Poor's downgraded Japan's long term sovereign credit ratings from AA to AA-.

Nearly one month later, Moody's Investors Service Inc. lowered its outlook on Japan's sovereign debt from "stable "to "negative," warning it may cut Japan's credit rating, citing concerns about the government's policies to manage the nation's monumental public debt.

Analysts said the cost of reconstruction following the devastating earthquake and tsunami may worsen Japan's financial situation and deteriorate its already fragile debt situation. They are worried that the quake would bring greater debt risk to Japan and raise the cost of its government financing.

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