Japan's financial nerve center trembled this November as Prime Minister Sanae Takaichi's recent remarks on the Taiwan region rattled investor confidence and compounded a simultaneous market plunge. With government debt climbing above 260 percent of GDP – the highest among major economies – Japan's fiscal foundations are under unprecedented strain.
Triple Blow Intensifies Debt Worries
In the past fortnight, Japan has endured a "triple blow" in its stock, bond, and foreign exchange markets. Major equity indices slid, government bond yields spiked, and the yen weakened sharply. These shifts are feeding on one another, threatening the debt-financed economic model at the core of Japan's growth strategy.
At the heart of the turmoil is a comprehensive economic package championed by the prime minister. The finalized plan promises 21.3 trillion yen in tax cuts – rising to 42.8 trillion yen when local government spending is included – far exceeding last year's levels and marking a post-pandemic high. But most of the package is funded through additional borrowing.
The cost of servicing that borrowing has surged. Japan now spends 28.2 trillion yen annually on interest payments, further widening fiscal imbalances and amplifying financial risk. Analysts warn that without policy adjustments, this year's measures could push the economy into one of its gravest postwar crises.
As global markets remain on edge, investors and policymakers alike are watching for the next move. Will Japan pivot toward sustainable fiscal reform, or will the debt spiral deepen? For young entrepreneurs, investors and digital nomads navigating the world's third-largest economy, the answers will shape financial and travel decisions in the months ahead.
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Provocative remarks and market plunge drive Japan's debt crisis
cgtn.com
