S&P says more than one-third chance of Japan downgrade, cites risks to Abenomics

TOKYO Mon Apr 22, 2013 11:00pm EDT

A U.S. flag is reflected in a window of the Standard and Poor's building in New York February 5, 2013. REUTERS/Brendan McDermid

A U.S. flag is reflected in a window of the Standard and Poor's building in New York February 5, 2013.

Credit: Reuters/Brendan McDermid

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TOKYO (Reuters) - Rating agency Standard & Poor's said on Tuesday it saw more than a one-third chance that it would downgrade Japan's sovereign ratings because of uncertainty about whether the government's push to revive growth and end deflation will succeed.

"The continuing prospect of a downgrade arises from risks associated with recent government initiatives and uncertainty of their success," S&P said in a report.

"Japanese Prime Minister Shinzo Abe's plan to lift Japan out of deflation and spur economic expansion--known as "Abenomics"--has three pillars: bold monetary easing, fiscal efforts to spur growth, and a strategy to induce private sector investment," it said.

"Of the three engines that Mr. Abe foresees reinvigorating the nation's economy, so far only one, monetary easing, has kicked into full gear. The others remain idle."

S&P has an AA- long-term rating on Japan's sovereign debt.

(Writing by Tomasz Janowski; Editing by Kim Coghill)

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