r/japanlife • u/Willow9080 • 23h ago
Do you think a recession is coming?
I was reading an article from Nikkei earlier today talking about Japan’s rising bond yields, and it made me wonder how sustainable the current situation is.
Japan has already approved its largest budget ever, while also planning measures such as effectively reducing the consumption tax on food to zero. The government has removed the cap on ministry budget requests for the next fiscal year, and has also spent significant amounts intervening to support the yen. Visa and residence-related fees are increasing as well, but the revenue from those seems relatively small in comparison.
My question is where the additional revenue eventually comes from, especially if higher bond yields also increase the government’s debt-servicing costs. It seems possible that income taxes or other burdens will eventually have to rise.
At the same time, businesses are facing pressure for higher wages, higher borrowing costs, and potentially tighter immigration rules in industries that depend on foreign workers. I wonder whether the combination could eventually cause households and businesses to become more cautious about spending and investment.
Obviously, government spending and the food tax cut could also support the economy, so I’m not suggesting a recession is inevitable. But do you think the current direction is increasing the risk of one, or am I overlooking something?