New credit rating blow for Japan

JAPAN'S handling of its huge debt problem came under fire again as Moody's became the third agency to downgrade its credit rating of the country.After cutting its rating one notch to Aa3, Moody's said it was unlikely to raise it for at least a year, and further downgrades could be on the way.

The move followed downgrades to AA by Standard & Poor's and Fitch ICBA last week, and Moody's echoed their criticisms over lack of action to tackle the fundamental problems facing the Japanese economy.

'Neither current macroeconomic policies nor new reform initiatives offer much tangible hope for an early turnaround in economic performance,' it added.

Japan is now officially in recession for the fourth time in a decade, but a government study released today showed that the economy was capable of annual growth of 2% if non-performing loans, unemployment and other structural problems were tackled.

The reduction came as no surprise to the Tokyo stock market, where the Nikkei 225 Average closed 82.03 points up at 10,452.65.