When credit rating agency Standard and Poor’s cut the Japanese sovereign credit rating from AA- to A+ (with a negative outlook) last night, they highlighted that the country’s economic prospects looked weak.
“Despite showing initial promise, we believe that the government’s economic revival strategy – dubbed ‘Abenomics’ – will not be able to reverse this (economic) deterioration in the next two to three years,” S&P said.
So, the analysts who downgraded the rating won’t be surprised by Japan’s disappointingly weak trade data for August, released today.
By all the major metrics, it undershot expectations.
Exports in August were up 3.1% year-on-year against expectations of a 4% rise. Crucially, this is also a step down from last month’s 7.6% annual pace. Imports fell 3.1% versus the 2.2% expected. Together, this combined to generate a bigger than expected deficit of 569.7 billion Yen.
The Ministry of Finance also said that exports to China fell 4.6% year on year.
