By the first three measures of debt on our list, Japan is no worse off than its developed peers, but Japan’s government debt comes in at a whopping 226% of GDP. Japan’s rapidly declining population is increasing in the ratio of retirees drawing benefits to workers paying for them, and causing government debt to skyrocket as a result. The slowing of population growth is occuring all over the developed world, but in Japan it’s happening at breakneck speed. The Associated Press reports that the Japanese population will shrink by one-third by 2060, and as the country adjusts to these demographic shifts, it will have to decrease benefits and raise taxes, too. (Luckily for the Japanese, they are starting with the lowest tax burden in the OECD — just 17% of GDP.) Meanwhile, the ratings agencies aren’t particularly confident that the country will find the political will to enact changes that could begin fixing its debt problem.
Total Debt as a percentage of GDP: 512%
Nonfinancial Corporations: 99%
Financial Institutions: 120%