Japan suffers credit downgrade following VAT rise delay

One of the three major credit rating agencies, Moody’s, has downgraded Japan’s credit rating following the decision to delay the Japanese Consumption Tax rise to 10% in 2015.

The rise had been planned to help the country manage its large soverign debt problems, and meet the costs of an aging population. However, it was delayed last week following a slump in growth in the second and third quarters of 2014. This was partially caused by the first leg of the VAT / Consumption Tax rise from 5% to 8% on 1 April 2014.

Japan’s new credit rating has changed, but Moody’s predicts a stable 12-18 months.  Read more about Japanese Consumption Tax here.