Even though the economy in Japan is showing signs of improvement and recovery, Moody’s ratings agency has warned that both economic growth and government action may not be enough for what is necessary to keep Tokyo’s ever-increasing debt under control.

Last month, the industrial output of Japan went up by 1% last month despite the huge plunge after the earthquake and tsunami that devastated the entire country. This increase is also partially due to the commitment of companies in Japan to work hard in May and June to bring their businesses as close to pre-disaster level as possible.

This increase and positive happenings in the economy has started talk among experts that Japan, as the third largest economy in the world, could see a V-shaped recovery from the second recession it’s experienced in three years. However, this optimistic outlook still failed to impress the people who work at Moody’s.

“The much larger than initially expected economic and fiscal costs of the March 11 earthquake are magnifying the adverse effects imparted by the global financial crisis from which Japan’s economy has not completely recovered”, said Moody’s.

Looking at the bigger picture, Japan has experienced a lot of economic stagnation in the last 20 years even though repeated efforts to stimulate the economy has created a national debt three times the size of its economy, which is worth $5 trillion.