Japan Financial Stress Serious As Government Delays Deficit Reduction

[Economy 52,839]

https://www.bnnbloomberg.ca/japan-s-new-economic-plan-puts-fiscal-discipline-on-back-burner-1.1093510

 

The Government of Japan has delayed plans for a balanced budget until at least 2025 and as late as 2027

 

Japan continues to be the worlds most indebted Nation which a debt to GDP ratio of 185% which was as high as 230% some years ago but the ratio fell as the economy grew faster than the debt

 

Japan has avoided financial meltdown as special unique circumstances have allowed Japan to enjoy much lower interest rates than most Nations, but despite the improvement in the debt to GDP Ratio rates globally as a whole are rising and it will be critical for Japan to get it's financial house in order

 

Japan also plans to raise sales tax by 2% to bring in a little extra revenue

[Eighteen 5,430]

what would happen if there were a major recession in the US in the next five years? the US is ballooning its deficit and debt rn (as far as i know) and i wonder if we could bounce back from that should it take a turn? and what would happen to the world economy regarding that as well? can the US go from 1st world to second world theoretically with a major recession in the midst of major debt and deficit? 

[Economy 52,839]

23 minutes ago, Eighteen said:

what would happen if there were a major recession in the US in the next five years? the US is ballooning its deficit and debt rn (as far as i know) and i wonder if we could bounce back from that should it take a turn? and what would happen to the world economy regarding that as well? can the US go from 1st world to second world theoretically with a major recession in the midst of major debt and deficit? 

Hard to say for sure but maybe not. Depends how severe the recession is too. If it's a mild recession almost for sure no

 

First of all the US has the worlds reserve currency so that alone instills some confidence in the dollar and would make it harder for investors to give up on US assets completely and cause a complete financial meltdown

 

Secondly, US debt is high but not as high as some people think. The main measure to look at a Nations debt burden is to compare it to the size of the economy because what's a lot for one Nation to handle may not be a problem for a larger Nation

 

Going by the Debt to GDP ratio, the US is by no means in a critical situation yet and many Countries in the world are way worse. A few examples include: Japan (worlds worst), Italy, Portugal, Greece just to name a few

 

However in time this could change. Trump has decided to increase the deficit (now at 5% of GDP per year) when the economy is doing pretty good at a time when finances are supposed to be improving not getting worse, so when the next recession hits deficits will probably rise even more. Some economists have said with current policy a moderate recession would increase the deficit to 8% of GDP which is almost as high as in the financial crises when the highest deficit hit 9%

 

So the US isn't critical yet but Trump has put America in a path where some years down the road it very well could be