Japanese government spending helped propel the economy’s bounceback from recession, but it has also added to public debt, which the International Monetary Fund now projects will rise to 237 percent of gross domestic product (GDP) this year, the largest among the major advanced economies.2 Along with this high debt, aging of the population and slow GDP growth pose important concerns for fiscal sustainability.
To solve the pressing problem of enhancing Japan’s growth potential, which I have been talking about in this speech, it is important that research institutions, private firms, and governments, together with financial institutions, use the wisdom that they have developed from their daily work and make steady progress.