The Eurozone economic crisis and the American “fiscal cliff” were central talking points at this week’s annual meeting between the International Monetary Fund and the World Bank in Tokyo. A further concern lurked beneath the surface however; namely the sovereign debt crisis of the host nation, Japan.
According to the IMF’s chief economist, Olivier Blanchard, “there are worries about the ability of the Japanese policy makers to reduce sufficiently their budget deficit.” Gross government debts are expected to rise to 237% of Japan’s GDP this year, compared to 198% in Greece and 126% for Italy. In discussions about Japan, the committee said that it is essential that the country make further progress in managing its massive fiscal debt in the medium term and also secure funding for this year’s budget.
During the IMFC meeting, Finance Minister Koriki Jojima stated that Japan would “take the advice seriously and work” to reduce the government’s mountain of debt. The country was praised by Managing Director of the IMF Christine Lagarde, who said that Japan’s scheduled consumption tax hike is “a very significant step toward fiscal consolidation”. The consumption tax hike was legislated in Japan earlier this year.
Speaking on the “Risky Safe Havens” panel however, Tomoya Massanao, a portfolio manager for Pacific Investment Management Co., said that some Japanese economists feared that the consumption tax hike would never be executed.
Japan has suffered financially from a diminished business presence in China – its most important trading partner – following recent territorial disputes. Earlier this week three top Japanese car manufacturers announced a steep decline in sales in the Chinese market over the last four weeks. Lagarde said she hoped the world’s second- and third-largest economies could resolve the current conflict “harmoniously and expeditiously”.
Sources include: Reuters, The Guardian, Wall Street Journal, Japan Times
If you need worldwide translation or interpreting services, TJC offers a wide range of services in more than 100 languages and dialects, with specialists in the financial and business sectors. For more information, visit our websites at TJC Oxford or TJC Global or contact us directly by email. Alternatively, visit our sister site for professional Japanese translation and interpretation services.