Por qué Japón es el país más endeudado del mundo | BBC Mundo

Summary

Japan, the third-largest economy in the world, has the highest public debt, reaching an astonishing 258% of its GDP. While other countries like the U.S. and Italy also have significant debt, Japan's unique ability to manage its finances lies in its strong domestic investor base and the country's overall stability. The debt grew significantly after the 1990s financial crisis and has been further exacerbated by natural disasters and global recessions. Despite this, Japan maintains a high level of trust from investors, with most of its debt held domestically and in yen, allowing the country to manage its obligations with low interest rates.

Takeaways

• 😀 Japan is the most indebted country in the world, with a public debt that is 258% of its GDP.
• 😀 Public debt refers to money owed by a government to private investors or other countries, used to finance public deficits.
• 😀 Countries like the United States, Italy, Spain, France, and Sudan have debts higher than 100% of their GDP, while most Latin American countries have smaller debts, except for Venezuela.
• 😀 Japan’s debt is $9 trillion, and despite the massive debt, it is not on the verge of bankruptcy due to investor trust and Japan's stable economy.
• 😀 Japan’s preference for saving rather than consumption has led to low internal spending, forcing the government to spend and incur more debt to stimulate the economy.
• 😀 Japan’s debt is considered controlled and not toxic, as it is manageable, despite high public debt levels.
• 😀 A major factor driving Japan’s debt is the aging population, which increases costs for public health and social security systems.
• 😀 Japan’s debt skyrocketed after the financial and real estate bubble burst in the early 1990s, leading to slow economic growth and higher government spending.
• 😀 In the 2000s, Japan’s public debt surpassed 100%, and by 2010, it had doubled, worsened by events like the 2008 financial crisis, the 2011 earthquake and tsunami, and the COVID-19 pandemic.
• 😀 Japan sells bonds to raise money, offering low-interest rates as a safe investment for international investors, allowing it to maintain high debt levels despite the low returns.
• 😀 Approximately 90% of Japan’s debt is owned by Japanese investors, and a significant portion is purchased by the Bank of Japan itself, reducing the need for foreign loans and interest payments.

Q & A

Why is Japan considered the most indebted country in the world?

Japan's public debt is equivalent to 258% of its GDP, the highest among all countries. This large debt is largely due to factors like the country's low consumption rates, the high cost of social welfare for an aging population, and the financial fallout from the bursting of a real estate and financial bubble in the early 1990s.

How does public debt differ from national debt?

Public debt refers to the money a government owes to investors or other countries, often used to cover budget deficits, i.e., when a country spends more than it earns. National debt can also include money owed by the central government to various entities.

Why do countries like Japan have such high public debt without going bankrupt?

Japan's ability to sustain high levels of debt is rooted in trust. Investors believe Japan will meet its debt obligations due to its stable political system and high economic output. Japan is seen as a safe investment, even though it has the largest national debt.

What role does Japan's demographic structure play in its high debt levels?

Japan has a very elderly population, which increases the costs of public services, especially healthcare and social security. The government must spend significantly to support this aging population, leading to higher public debt.

How did the economic crisis in the 1990s impact Japan's debt levels?

The burst of Japan's financial and real estate bubble in the early 1990s caused a prolonged economic downturn, leading to lower government revenues and higher spending. This situation led to an increase in public debt, which has continued to grow since then.

What other major events have contributed to Japan's growing debt over the years?

Besides the 1990s economic crisis, events like the 2008 global financial crisis, the 2011 Fukushima earthquake and tsunami, and the COVID-19 pandemic also had significant economic impacts, prompting the government to borrow more to sustain public services and recovery efforts.

How does Japan manage to continue borrowing money despite its high debt?

Japan can continue borrowing because it offers bonds that investors see as a safe investment, due to Japan's stable political and economic environment. The risk of default is considered very low, so Japan can borrow at relatively low interest rates.

Why does Japan issue most of its debt in yen, and how does that help the country?

Japan issues most of its debt in yen, which reduces its exposure to foreign currency fluctuations. This strategy minimizes the impact of international market volatility and makes it easier for the government to manage its debt.

Who are the main investors in Japan's public debt?

Around 90% of Japan's public debt is held by domestic investors, including Japanese banks and the Bank of Japan itself. This reduces reliance on foreign investors and helps the government control its debt more effectively.

Despite its high debt, how does Japan maintain its global economic standing?

Japan remains one of the world's largest economies due to its innovation, especially in technology, and its status as a member of the G7. It also maintains large foreign currency reserves, which help stabilize its economy and boost investor confidence.