S&P downgrades Japan's credit rating
A money changer counts Japanese yen notes.
TEXT OF STORY
STEVE CHIOTAKIS: A piece of surprising bad news for Japan. The rating agency S&P has slashed Japan's so-called 'long term credit rating.' That's basically a national credit score. And it could have repercussions in this country.
The BBC's Roland Buerk is in Tokyo. Hi Roland.
ROLAND BUERK: Hi.
CHIOTAKIS: Japan seemed to be staying out of trouble after the recession. Why does S&P think it's in trouble now?
BUERK: Well, the problem with Japan is its debt is already approaching 200 percent of GDP. Far bigger than a country like the United States. And its deficit -- the amount that's adding to that debt -- is very high too. And what S&P is saying is that they don't believe Japan is going to be able to bring that down over the next 10 years. Essentially the problem in Japan is this: the country is getting older, the country's population is declining, so there are fewer people to save, so the debt might become unsustainable.
CHIOTAKIS: Could this affect the global recovery, Roland?
BUERK: In the short term, no. What might happen is Japan has to pay a bit more to borrow. But in the long term, some people here and abroad think that Japan could be an accident waiting to happen. That it could, one day, reach a tipping point. And this of course is the world's third biggest economy, so if that happens, if Japan goes the way of Greece for example, that would have a massive affect on the world.
CHIOTAKIS: And why should Americans keep an eye on this? Is this going to help or hurt our economic future here?
BUERK: Well any problem for Japan is a problem for the United States because Japan is second only to China in terms of its gold reserves and its foreign exchange reserves and things like U.S. treasuries. So what happens in Japan does really affect the United States.
CHIOTAKIS: The BBC's Roland Buerk in Toyko, Roland thank you.
BUERK: Thank you very much.