Japanese Government debt to reach 204.2% of GDP

| January 20, 2011 | 0 Comments

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.”

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