Moody’s has opted for a measured approach to Japan’s prospects, leaving its credit rating at a solid ‘A1’ with a stable outlook. Despite the nation’s debt exceeding 200% of its GDP, analysts believe that Japan’s economy is holding strong thanks to reflationary measures and prudent fiscal policies.
Moody’s also asserts that Japan will slowly but steadily work toward reducing its colossal public debt, although this effort may be clumsy and inefficient. In the coming years, the budget deficit is expected to remain below 3% of GDP — quite moderate domestic spending by any standard.
New Prime Minister Sanae Takaichi, inspired by Margaret Thatcher, has promised to increase defense spending to 2% of GDP ahead of schedule — implying that Japanese tanks and missiles will be ready for political battles with a style reminiscent of the "Iron Lady."
