For the pastfour years, Japan has been able to maintain itself as the world’s third largesteconomic power in the world.
Economic growth in 2016 was 1% after which it increasedto 1.2% in 2017. It is estimated to pick up to 1.5% in 2018 and will remainclose to 1% in 2019. The Japanese havebeen able to manage a significant GDP of approximately $4.84 trillion (since2012) falling third behind China. Japan continues to be heading towards itsprosperous goal of being the strongest economy in the world, not just by desirebut by determination and positive results.
Over past 30 years, Japan has been the second largest aid donor inthe world with providing around $200 billion towards supporting the growth ofdeveloping countries. Last year in July’17, the Japanese government signed adeal with the government of Kenya to provide a loan of approximately 12.4billion yen for thedevelopment of Mombasa Port area (which is the gateway to East Africa). Mombasa Port has seen its volume of cargo grow rapidly in recent years. Toaccommodate this growth, the Japanese government has provided funds to build anew terminal in Mombasa.
This expansion is expected to increase revenues fromimport and export for Kenya thus benefiting the economy. Not just the African countries, but Japan has also provided loansof around $1 billion to the Philippines. The loan was provided to fund keyinfrastructure projects that would help increase governmental income therefore,assuring economic growth in the country. The Japanese understand that the payback of these loans will bedifficult for the developing countries, therefore even after almost a decade ofcancelation of bills and debts, developing countries still owe 4 trillion andcounting. In fact, even if developing countries try to pay off their debts, itwill surely create a deficit in their balance of payment. Leading to the sameissues for why these loans were provided in the first place. Not only theirbalance of payment, but also their infrastructure, imports, and governmentrevenue will be indirectly affected.
On the other hand, if these loans are not paid back, it will causefinancial imbalance for the creditors, thus debt relief should not be and isnot a solution for this growing international issue. However Japan is ready totake such a risk for assisting the developing countries, as Japan cuts out 940billion yen in debt rescheduling to date and a has a debt relief policy ofcutting debts by even up to the 80% ceiling if necessary. Nonetheless, theJapanese feel reaching an affordable and reliable solution is no more a want,but has become a need for the betterment of our future together. Japan strongly feels that an assured solution of this issue isForeign Direct Investment (FDI) in developing nations. FDI’s would benefit boththe creditors and the debtors, as there will repartition of profits back to thehome country as well as tax revenue for the host country will increase.Other than that, FDI’s will also help increase aggregate demand asit creates more job opportunities, ergo increasing people’s income andindirectly affecting standard of living in a positive manner. All this willhelp increase GDP for developing nations and thus assist them to pay of thesedebts efficiently. Asone of the most active members of the World Bank committee, Japan is ready tocontinue its work towards hunting down solutions for a prosperous, stable andcommitted forthcoming era.