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Japan fiscal crisis: Japan, the U.S.'s biggest creditor, faces a Greece-like fiscal crisis as borrowing costs hit a 20-year high; here's how it ended up there
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Japan fiscal crisis: Japan, the U.S.’s biggest creditor, faces a Greece-like fiscal crisis as borrowing costs hit a 20-year high; here’s how it ended up there

As Japan’s economy shrinks and its debt mountain rises, Prime Minister Shigeru Ishiba issued a harsh warning this week, “Our country’s fiscal situation is undoubtedly extremely poor,” adding, “worse than Greece’s,” quoted Fortune.
Japan’s Debt Mountain Grows LargerJapan’s outstanding debt is more than the size of its gross domestic product by about 2.5 times, Fortune reported. Experts have pointed out that, “The lower the denominator—in this case the economy—the greater the ratio and the less sustainable a nation’s debt burden becomes,” according to the report.
Japan’s Economic Slowdown and Rising Borrowing CostsInvestors have also warned of a recession as Japan’s GDP shrank in the last quarter, and on Monday, the cost of borrowing increased after yields on its 40-year bond reached highs which was last seen about 20 years ago, as per Fortune.
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Prime Minister’s Warning Ishiba, who was elected last year, also cautioned MPs that Japan could not afford any tax cuts paid for with more borrowing, according to the report.Japan’s Role as a Major US CreditorThis comes at a time when Moody’s downgraded the United States of its highest AAA credit rating due to the worsening fiscal outlook, reported Fortune. The downgrade led to an across-the-board selloff in government debt, with the US 30-year yield rising above 5%, near its 5.18% multi-decade high from 2007, as per the report.
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Japan, which is one the largest foreign financiers of the United States federal government, is facing its own financial challenges as it is heavily indebted, according to Fortune. As per official US data, Japan’s holdings increased to $1.13 trillion in March, which is about a quarter of its GDP, reported Fortune.FAQsHow much debt does Japan have?
Japan’s debt is more than 2.5 times the size of its economy.
What’s happening with Japan’s economy?
Japan’s GDP shrank last quarter, raising fears of a recession as borrowing costs rise, signaling trouble for the economy, as per Fortune.

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