The Bankwatch

Tracking the consumer evolution of financial services

Worries about government debt load in Japan

Following on the testimony from US Bernanke today, similar moves in Japan, the next largest world economy (for the moment), to reduce debt which remains at a world leading high.

Japan’s long-term public debt, which is already the largest of any industrialized nation, is projected to reach 168 percent of GDP at the end of March 2010, according to the ministry.

Concerning when to achieve a surplus in the primary balance, many members of the Aso-chaired panel believe it may take about 10 years, based on the latest economic growth and revenue projections, according to government officials.At the next panel meeting, the members will work concretely on new numerical fiscal targets, the officials said.

The combined situation has implications for both US and Japanese domestic economies and for the rest of the world.  While Japan has historically funded its own debt domestically, these levels may not be achievable.  The impact of government borrowing of this scale for US and potentially Japan is on future inflation and interest rates.

Researched by Nobuyo Henderson

Written by Colin Henderson

June 3, 2009 at 21:12

Posted in economy

Tagged with , ,

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