TOKYO, July 29 (Xinhua) -- Credit rating agency Fitch Ratings Inc. has downgraded its outlook for Japan's credit rating from "stable" to "negative" owing to the coronavirus pandemic causing a sharp economic contraction amid weak consumer spending and business investment.

As widely cited in local media Wednesday, the international agency said in a report released the previous day that, "The coronavirus pandemic has caused a sharp economic contraction in Japan, despite the country's early success in containing the virus."

In terms of the outlook for Japan's economy, Fitch Ratings Inc. said it "projects the economy to contract by 5 percent for the full year in 2020, before rebounding to 3.2 percent growth in 2021 due partly to the low base effect."

The agency, however, highlighted possible downside risks that could further impact the outlook for Japan's economy.

"However, a renewed surge in (coronavirus) cases is creating the possibility of further containment measures and risks to the economic outlook," the agency said, adding that Japan's public debt, the worst in the industrialized world, was set to further increase.

"...sharply wider fiscal deficits in 2020 and 2021, as we project, will add significantly to Japan's public debt, which even before the pandemic was the highest among Fitch-rated sovereigns as a share of GDP," the report also said.

Despite the downward revision, Fitch maintained Japan's sovereign rating at A, saying that Japan's current account surplus had contributed to it maintaining the rating.

In June, citing similar pandemic-induced downside economic factors, S&P Global Ratings also cut its outlook for Japan's sovereign rating to "stable" from "positive." Enditem

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