S & P Japan Crop Outlook

Rating agency Standard & Poor's (S & P) yesterday cut its outlook for Japan's foreign debt, related to the earthquake and tsunami disaster experienced by the country. S & P warned that Japan's reconstruction costs could exceed $ 600 billion

Nevertheless, the S & P declared disaster that caused deaths and loss of 26,000 people and triggered a nuclear crisis will not interfere with the medium-term growth potential of Japan. However, the rating agency estimates the cost to be borne by Japan's recovery will be very significant, ranging between 20 trillion yen to 50 trillion yen

S & P said the figure of 30 trillion yen is the main estimates, if no steps to increase revenue, like raising taxes. Figures issued by S & P was higher than the prediction of the Japanese government amounting to 25 trillion yen, which without including its nuclear reactor accident.

"Standard & Poor's estimates that the cost recovery associated with earthquakes, tsunamis, and leakage of nuclear reactors will improve Japan's fiscal deficit at 3.7% of GDP, above the previous estimate, by 2013," the ratings agency said in a statement. Related to that, S & P cut its outlook for Japan's foreign debt from stable to negative.

"Negative Outlook is a signal that further downgrades could occur if the Japanese public finances weaken in next two years, if there is no fiscal consolidation to address them," said S & P. However, the agency believes the economic outlook and fiscal uncertainties Japan will be reduced in six to 24 months to depan.Terkait with it, the S & P does not change the ranking of Japan's foreign debt to long-term at 'AA-'.

S & P announcement was issued when Japan was struggling to cope with debt that is now the industry is the largest in the world, whose value reached 200% of GDP. Yoshihiko Noda Japanese Finance Minister did not comment about the decline in outlook by S & P outlook. He simply asserted that Japan will conduct a balancing between the needs of reconstruction with fiscal reforms.

"We have secured financial resources (budget for additional earthquake) without having to issue government bonds," he said. "We will maintain this attitude in principle and continue to increase confidence in the economy and our financial domestically and internationally".