Disaster

“The country’s savings rate, long one of the highest in the world, is now below zero. In short, Japan’s citizens are spending more than they earn. By comparison, the rate in the United States, where consumers have a reputation for living beyond their means, is on the rise, hitting 5.5 percent in January.

The reversal is stark.

At the equivalent of two and a half years of economic output, Japan’s debt load is the heaviest in the world. Yet about 90 percent of the debt is held locally, meaning that Japan is, in effect, lending to itself.

That is one reason, economists say, that Japan has avoided the kind of bond market pressure that has sent less indebted countries like Greece into crisis. Mr. Baba calculates that Japan could run short of the savings it needs to fund the debt locally by about 2020. After that, it would need to turn to foreign investors — a potentially destabilizing shift.

“Once we have to rely on foreign investors to finance the debt,” he said, “that could be the beginning of a disaster for Japan.”

Japan’s Recovery Is Complicated by a Decline in Household Savings