Japanese economy plagued by slow growth, political stalemate: S&P

24 Sep 2008

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Japan's overall growth prospects will be weak in 2008 and 2009.   

According to rating agency Standard & Poor's "Political Stalemate And Weak Economic Growth Trap Japan In Stagnancy," released yesterday, Japan, seemingly caught in a web of political stalemate and slowing growth, for now, finds itself stuck -- with little potential for economic improvement in the near term.

Japan's GDP growth for fiscal 2008 ending 31 March 2009, is expected to be 0.7 per cent, which is lower than our earlier forecast of 1.2 per cent. Higher global oil, commodity, and food prices, combined with the slower global economy, are adversely affecting Japan's economy.  
 
Another recent change in political leadership further delaying structural reforms, while weakening near-term growth prospects and political pressures are diluting the government's efforts for fiscal consolidation, the report noted.

"The struggles in parliament comes at time when the country's near-term economic prospects are bleak," S&P credit analyst Takahira Ogawa said.

Higher oil and food prices, slower global economic growth, and declining real disposable income are limiting the growth rate of Japan's domestic demands, particularly since the second quarter of 2008. 

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