Japan’s attempts to stimulate its domestic economy will not be able to change the fact that its biggest trading partners, from the United States to China and the European Union, are also wallowing in recession, and a period of low demand will last for some time.
Japan, like many countries, miscalculated its 2008 budget, winding up with a 47.8 percent deficit (rather than the predicted 35 percent). In 2008, Tokyo’s expenditures leaped above predictions by 7 percent (to 88.9 trillion yen, or US$952 billion), while revenues fell a shocking 15 percent below expectations (to 46.4 trillion yen or US$497 billion). The value of the deficit amounted to 8 percent of Japan’s GDP of 510.2 trillion yen (US$5.5 trillion).
The proposed 2009 budget, which includes the aforementioned 2008 supplementary budget plus further stimulus efforts, will be Japan’s biggest yet at 88 trillion yen (US$942 billion). If it is approved, Tokyo’s total fiscal stimulus to the financial crisis will amount to 12 trillion yen (US$128 billion) or about 2.3 percent of GDP, a full percentage point higher than similar efforts by Japan’s peers.
Japan’s central and local government debt is expected to jump to 157 percent of GDP in 2009, up from 154 percent in 2008.
In worst case the Obama budget would push us to 5%, so lets be about it and rebuild America.