In 2019, Japan's debt reached 200.6% of GDP. As of June 2019, the nation with the highest debt-to-GDP ratio is Japan with a ratio of 253%. License : CC BY-4.0 Central government debt, total (% of GDP) International Monetary Fund, Government Finance Statistics Yearbook and data files, and World Bank and OECD GDP estimates. Japan does not have a debt problem. Japan's debt mountain: How is it sustainable? One possibility is that the markets are wrong and the participants do not properly recognize the risks. Japan debt to gdp ratio for 2016 was 196.58%, a … If the ratio indicates that a nation is unable to pay its government debts, there is a risk of default, which could wreak havoc on the markets. So even though its net debt-to-GDP ratio remains high, and some of those assets may not be easily sold, the situation is not as bad as many assume. Can a developed country ever safely carry this rate of debt to GDP, or will it contribute to very negative consequences in case of a downturn? Because debt is a stock rather than a flow, it is measured as of a given date, usually the last day of the fiscal year. Readers can also interact with The Globe on Facebook and Twitter . Japan's famously aging population translates into increasing pension, medical and elder-care expenditures. The next highest ratio is from Greece, which at 181.1%, lags significantly behind Japan. Issuance, Redemption, and Outstanding of Public and Corporate Bonds, Trading of Interest-bearing Government Bonds by Purchaser, Sources of Changes in Current Account Balances (Projections), Sources of Changes in Current Account Balances and Market Operations (Preliminary), Sources of Changes in Current Account Balances and Market Operations, Sources of Changes in Current Account Balances and Market Operations (every business day), Monetary Base and the Bank of Japan's Transactions, Amounts Outstanding of Deposits by Depositor, Deposits, Vault Cash, and Loans and Bills Discounted, Deposits, Vault Cash, and Loans and Bills Discounted by Prefecture (Domestically Licensed Banks), Principal Figures of Financial Institutions, Time Deposits: Amounts Outstanding and New Deposits by Maturity, Commitment Lines Extended by Japanese Banks, Bank of Japan's Transactions with the Government, Japanese Government Bonds Held by the Bank of Japan. Some information in it may no longer be current. Notices of Changes and Corrections 開閉ボタン. License : CC BY-4.0 Home > Statistics > Public Finance > National Government Debt, BIS International Locational Banking Statistics and International Consolidated Banking Statistics in Japan, Regular Derivatives Market Statistics in Japan, Central Bank Survey of Foreign Exchange and Derivatives Market Activity, Statistics on Securities Financing Transactions in Japan, Summary of "Inflation Outlook of Enterprises", Input-Output Price Index of the Manufacturing Industry by Sector Japan's Government debt accounted for 214.4 % of the country's Nominal GDP in Jun 2020, compared with the ratio of 201.7 % in the previous quarter. Why hasn't all this debt created a fiscal crisis for Japan? Categori- zation before Dec. 2016; By Category; Outline of Statistics and Statistical Release Schedule 開閉ボタン. Therefore, its ratio of net debt to GDP is closer to 100 per cent. © Copyright 2020 The Globe and Mail Inc. All rights reserved. This means that markets are predicting Japan's default once in 250 years. With stimulus packages and a rapidly ageing population that pushes up healthcare and social security costs, Japan's debt first breached the 100-percent-of-GDP mark at the end of the 1990s. Average Rates of Issuance for Short-Term Corporate Bonds, etc. Read our, I'm a print subscriber, link to my account, Avoid the use of toxic and offensive language. Japan has a considerable number of assets – worth about ¥65-trillion ($650-billion) as of March, 2013. Simply put, Japan owes a lot, but it owns a lot of assets, too. By 2014, Japan had the world's highest debt-to-GDP ratio. Our February projection that the ratio would remain stable in 2020-2021 then fall to 222% in 2028 was sensitive to nominal GDP and interest rate assumptions. Government Debt to GDP in Japan averaged 138.61 percent from 1980 until 2019, reaching an all time high of 238.20 percent in 2018 and a record low of 50.60 percent in 1980. from 2016; from 2011; from 2006; from 2001; from 1997; Explanations of Statistics. Moreover, Japan made several policy mistakes. Stagnation reduces corporate taxes and government revenues. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Economic growth remains the primary goal of economic policy: There is no sound finance without a sound economy. Information about the treatment of the Japan Post on the statistics compiled by the Bank of Japan Notices of Corrections. During almost two decades of deflationary stagnation, Japan has recorded an average annual nominal growth rate of 1 per cent, which is dismal. For reprint rights: India suggests partnership with Japan in Russian Far-East, Japan PM Shinzo Abe, Japan's longest-serving premier, resigns over worsening health, Vistara, Japan Airlines enter frequent flyer partnership, Japan stocks fall on coronavirus worries; upbeat earnings outlook limits losses, Japan PM Suga sets 2050 deadline for carbon neutrality, Japan shares end higher on US stimulus hopes, post weekly gains, Inciting hatred against a certain community, India's 1st Online Instant Personal Loan Marketplace, How your most loved influencers plan to shop during Covid. A debt to GDP ratio of 236% may seem high, but it is not the highest that Japan has ever had. And third, one has to tackle the fiscal problems posed by changing demographics. This is a space where subscribers can engage with each other and Globe staff. We aim to create a safe and valuable space for discussion and debate. Greece's figure, at 177 per cent, seems small by comparison. It has been increasing over years, and the level has remained above 200%. Unlike Greece, however, there is no sign of fiscal crisis in Japan and the markets seem to confirm it: Interest on a 10-year Japanese government bond is a meagre 0.3 per cent, and the premium on a credit default swap of these bonds, proxy for the probability of default, is hovering around 0.4 per cent. Could the markets have been wrong for so long? It is the gross amount of government liabilities reduced by the amount of equity and financial derivatives held by the government. Japan's government debt to GDP ratio data is updated quarterly, available from Dec 1994 to Jun 2020. And in 2000, the Bank of Japan terminated its zero-interest-rate policy before Japan overcame deflation. Second, we must understand why Japan's debt-to-GDP ratio deteriorated in the first place. First, that deflation can be dangerous for an economy and a state's finances. Copyright Bank of Japan All Rights Reserved. If you are looking to give feedback on our new site, please send it along to, To view this site properly, enable cookies in your browser. Your Reason has been Reported to the admin. The simple answer may be that people still believe Japan can manage its debt. Download The Economic Times News App to get Daily Market Updates & Live Business News. In short, Japan can still pay its debt by overcoming deflation and resuming economic growth. Despite a setback caused by a consumption tax hike in 2014, tax revenue for that fiscal year increased by 12.3 per cent over the previous year, reaching its highest level since 2008. But how? This is a space where subscribers can engage with each other and Globe staff. Click here to subscribe. Let's reshape it today, Hunt for the brightest engineers in India. Originally answered: How is Japan able to function with a debt to GDP ratio of 250%? 351 King Street East, Suite 1600, Toronto, ON Canada, M5A 0N1, Growing popularity of home equity lines of credit spurs debt warnings, The debt-to-income ratio doesn’t always reflect reality, Low rates, high risk: Behind debt's record climb, Due to technical reasons, we have temporarily removed commenting from our articles. First, it's important to know that Japan's debt-to-GDP ratio is exaggerated. 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