2017.12.0605:11:00UTC+00Moody's Affirms Japan's Sovereign Ratings

Moody's Investors Service retained the sovereign ratings of Japan on Wednesday.

The credit rating was kept unchanged at 'A1' with 'stable' outlook.

The affirmation reflects the strengthened prospects of a broadly stable debt burden over the next few years and further improvements in debt affordability, helped by somewhat higher GDP growth at present, Moody's said. The agency expects the debt burden to remain broadly stable in the next few years, albeit at very high levels.

Although stimulus package announced in 2016 is set to widen the deficit in fiscal 2016 and fiscal 2017, the general government debt burden is likely to stabilize in the next few years at around 220 percent of GDP.

Moody's forecasts real GDP growth at 1.5 percent in 2017 and 1.1 percent in 2018. That is above Japan's long-term potential and Moody's expects growth to fall thereafter to under 1 percent.

Over the long term, Moody's said the ability of the government to continue to refinance its extraordinarily high debt burden at affordable costs will determine Japan's credit profile.