Japan White Paper Notes Concerns over Corporate Debt Spike

Economy Politics

Tokyo, Sept. 24 (Jiji Press)--The Japanese government in a fiscal 2021 white paper Friday expressed concerns about an increase in corporate debts amid the novel coronavirus pandemic.

The country's economy is in a recovery phase, but the pace of pickup is slow due to the intermittent declarations of a state of emergency over the coronavirus crisis, said the Annual Report on the Japanese Economy and Public Finance, which was submitted to a cabinet meeting by economic and fiscal policy minister Yasutoshi Nishimura the same day.

While noting progress in vaccinations against the virus, the report raised concerns over increasing corporate debts and shortages of parts supplies. It called for accelerating economic growth through the promotion of digitalization and measures against global warming.

Consumer spending, which makes up a major part of domestic demand, is moving up and down, according to the report. But the size of growth in the balance of cash and deposits at households as of the end of March 2021 compared with 2019, before the start of the pandemic, turned out about 35 trillion yen larger than expected thanks in part to a COVID-19 relief program by the government in which 100,000 yen was given per person to all citizens in the country last year.

Corporate bankruptcies are at the lowest level in the past 50 years thanks to the government's financing aid and other measures, but corporate debts are soaring. As of the end of June this year, combined debts at nonfinancial firms in the private sector were some 27 trillion yen more than the level estimated based on the trend in the four years to 2019.

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