Japanese Government debt to reach 204.2% of GDP
Despite being one of the first major economies to emerge from recession – in the second quarter of 2009 – Japan faces many risks to its recovery.
Not only is it battling with deflation, it struggling with a strong yen, which continues to weaken demand for exports and threatens the economic recovery.
A short period of deflation (where prices fall rather than increase) could be a serious threat to the economy because it deters consumers and businesses from spending in expectation of falling prices.
Today, a news report has suggested that Government debt is to reach 204.2% of GDP.
This compares with 136.8% for Greece and 112.7% – according to estimates from the OECD.
Japanese debt is the highest of any industrialised nation.
Earlier this week, Japan’s newly-appointed fiscal policy minister warned that the Government must take immediate action and create a plan for fiscal reform to avoid deepening the economy’s significant debt.
Yoshito Sengoku, who was chief cabinet secretary until a reshuffle on 14 January told reporters on 6 January that Japan’s fiscal situation is “approaching the edge of a cliff.”