Japan may be strongly urged by its Group of 20 counterparts to push forward with structural reforms in the near future as fears grow that it will soon become a country with a constant current account deficit.
At a two-day meeting of the G-20 finance chiefs ending Sunday in Sydney, some emerging economies were called on to reduce their current account deficits, which have triggered a selloff in their currencies and spread volatility in markets around the world.
If the current account deficit widens while its trade deficit expands, that could raise concern that Japan cannot cover its fiscal deficit with domestic assets alone, possibly sending Japanese government bond prices into a tailspin — and their yields into a climb — disrupting global financial markets.