While economic stimulus certainly helped to give Japan’s economy a shove along in 2013 (along with a lower yen, of course), the Wall Street Journal asks
“How much can the world’s third-largest economy continue to grow without extra government spending
and how worrisome is the country’s massive debt burden?”
Two rather good questions. And thorny ones.
Note:
Japan’s recent growth has come largely from fiscal stimulus and from exports
And from economic stimulus significantly lifting public demand
But, “The Japanese government will continue to face the challenge of achieving enough fiscal consolidation to reassure investors while not slowing down the recovery” (that’s IMF chief economist Olivier Blanchard)
Even more spending is going to raise further concerns amongst investors about the ability of Japan’s government to pay the debt down ( … OK, you say, they can simply issue more currency to pay their debts … indeed they can (unlike those countries locked into a primitive currency system like say, oh, I don’t know, maybe the euro
) … but I digress … Japan can simple ‘print more yen’ to pay their debt … yep, sure can …. but u wanna hold debt in a currency being debased that way? …. but I ramble).
The article is here, ungated. Worth a read on a quiet session so far.
