Japan's economy is trapped in a vicious circle caused by excessive corporate domestic investment and debt that leaves exports as its only option for avoiding another, more serious, recession, a British economist told a recent seminar in Tokyo.
"Corporate investment in Japan is excessive, and this is a serious problem because it produces very low returns on capital and makes the corporate sector extremely vulnerable to any downturn in the economy," Andrew Smithers, chairman of Smithers & Co., told the Jan. 31 seminar at Keidanren Kaikan.
"Corporate debts are still excessive, interest rates cannot therefore be raised easily without posing a considerable threat to the economy," he said.