Japan may face rating downgrade as massive debt grows
Moody's Investors Service said it has put Japan's sovereign ratings on review for a possible downgrade.
The rating agency said the review was due to concern over faltering growth in the world's number three economy and the country's massive public debt.
It put both Japan's Aa2 foreign and local currency ratings on review. Moody's said Japan's government lacked an effective strategy to tackle ballooning government debt.
Faced with tumbling output and exports following the March 11 earthquake and tsunami, Japan's economy recently slipped into a recession after contracting at an annualised rate of 3.7% in the first quarter.
The country's unemployment rate in April rose for the first time in six months, while the nation's industrial production rebounded weakly from a record drop after the natural disasters.
But output was seen picking up strongly in May as carmakers and other manufacturers got back on line.
The jobless rate edged up to 4.7% from 4.6% in March due to job losses in the retail and wholesale sectors, the Ministry of Internal Affairs and Communications said yesterday.
The number of workers in those sectors dropped in April by 390,000 from a year earlier.
The number of workers in the hotel and restaurant businesses in April also fell by 30,000 from a year earlier, underscoring a plunge in tourism demand following the March disasters and an ongoing crisis at a tsunami-crippled nuclear power plant.
Japan's industrial production - a key barometer of economic health - inched up 1% in April from the previous month after plunging a record 15.5% in March amid supply disruptions in the wake of the disasters, the Government said.
The earthquake and tsunami killed more than 24,000 people and destroyed hundreds of factories in Japan's coastal north east, forcing manufacturers such as Toyota and Sony to suspend production.
The disasters sent Japan's economy into a recession, and Moody's Investors Service has warned that it could downgrade Japan's sovereign ratings due to faltering economic growth and the country's massive public debt.
The rating agency put both Japan's Aa2 foreign and local currency ratings on review for a possible downgrade.
The Japan Car Manufacturers Association reported that production last month stood at 292,001 vehicles, marking a dramatic drop from 731,829 vehicles the same month a year earlier.
It was the seventh straight month of on-year declines.
Japanese carmakers have been forced to lower production levels in Japan, and are not expecting to return to pre-disaster levels until later this year.