This has been a rough year on the road to recovery for the global economy. Abnormal weather has led to higher food prices, persistent demand has pushed up energy prices, the U.S. economy remains in a jobless malaise, the Arab and Mideast world has been rocked by citizen unrest, and Europe continues to struggle mightily with sovereign debt and fiscal policy issues.
With that backdrop, it is not surprising that there have been a spate of sovereign downgrades so far this year. While no country has yet defaulted, the risk is arguably as high as it can get without an actual default, and that has ramped up investor anxiety and borrowing costs.
For purposes of convenience for this analysis, only Standard & Poor's ratings actions have been included.
1. A Rough Situation Made Worse in Japan
Japan started the year with sufficient problems just from its own economic situation. S&P downgraded Japan's sovereign rating in January (the first time in nine years) largely on the basis of Japan's huge debt, struggling economy, and decided lack of leadership in addressing either problem. While most of Japan's debt is internally-owned, it is nevertheless a significant economic deadweight. (For related reading, see How The Japanese Crisis Affects The U.S.)
To read the full column, please follow the link below:
http://financialedge.investopedia.com/financial-edge/0711/5-Economies-That-Have-Been-Downgraded-This-Year.aspx
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