237% debt of its GDP on Japan
According to a report, in the last days of September last year, the debt amount on Japan was $ 9.087 trillion. This amount is 237 percent more than its GDP. The biggest reason behind the huge debt on Japan is that in order to keep its economy running, the government has invested more money in domestic expenditure for many years. According to a BBC report, according to Takeshi Tashiro, senior fellow at the ‘Peterson Institute for International Economics’, people in Japan save more, while investment is less. That’s why the demand is very weak here. In such a situation, the need for ‘economic stimulus’ is felt from the government.
higher spending on health care
According to Takeshi Tashiro, an important reason for this problem is the population in Japan. Japanese people live longer than the rest of the world. In such a situation, more is spent on their social security and health. It is believed that people in Japan are more apprehensive about the future and place more emphasis on savings. For this, Japanese people invest all their earnings in saving as much as possible before retiring.
The country survives after being in debt
Interestingly, despite being in debt to such an extent, Japan continues to have the confidence of foreign investors. Every year, investors lend money to Japan through ‘debt purchases’ that keep the economy going. According to the BBC report, the debt burden on Japan started increasing in the 90s because during this period there was a huge decline in the financial and real estate business. However, according to statistics, in the year 1991, the GDP and debt ratio was only 39 percent. But after this, Japan’s economy continued to decline year after year and the debt kept increasing.
How does Japan get loan
Japan borrows from the international market on the promise that it will return all of its money to investors with some profit. Since Japan has never been bankrupt till date, it also gets this money. According to Tashiro, the main reason behind Japan getting loans on a large scale is that it is a developed country. Being a developed country, Japan’s bonds would have a higher value, which acts as a better security for the loan. There are many investors in the world who are more concerned about the safety of their money than profit. Japan is the preferred country for such investors.