Will a fiscal mess thwart Japan’s nascent economic growth?
Fears first raised a quarter of a century ago may be about to come true
![Visitors in front of illuminated lanterns at the Kokua Castle in Kitakyushu, Japan](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/content-assets/images/20231209_FNP001.jpg)
When moody’s, a research firm, cut Japan’s top-grade credit rating and warned of a “significant deterioration in the government’s fiscal position”, Nintendo’s first colour Game Boy was taking the world by storm and Japan’s net government debt ran to 54% of GDP. Twenty-five years later that figure stands at 159%. The growth has been cushioned by a fall in government bond yields, which means that Japan paid less interest to its creditors last year than it did three decades ago. But now Moody’s warning may finally come true.
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This article appeared in the Finance & economics section of the print edition under the headline “Tax and pretend”
Finance & economics December 9th 2023
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