TOKYO, May 10 (Reuters) – Japanese households’ outstanding debt fell to its lowest level since 2001 in the first quarter of 2022, government data showed on Tuesday, as households remained cautious about spending amid the COVID-19 pandemic.
Outstanding debt, excluding loans, declined by 1.6% from a year earlier to 405.85 trillion yen ($3.06 trillion), marking the 12th straight quarter of decline, the data from the Bank of Japan (BOJ) showed.
It was the lowest level since the central bank began compiling the data in 2001.
Household debt in Japan has been on a declining trend for years, as the country’s population ages and fewer young people enter the workforce. The COVID-19 pandemic has accelerated this trend, as people have become more cautious about spending and have opted to save more instead.
The decline in household debt is a positive sign for Japan’s economy, as it suggests that households are becoming more financially sound. However, it also poses a challenge for the BOJ, as it makes it more difficult to stimulate economic growth through monetary policy.
The BOJ has been trying to boost inflation and economic growth by keeping interest rates ultra-low. However, the decline in household debt has made it more difficult for the BOJ to achieve its goals, as low interest rates have less of an impact on households that are already not borrowing much.
The BOJ is expected to keep interest rates ultra-low for the foreseeable future. However, it may need to consider other policy measures to boost economic growth, such as increasing government spending or providing more direct support to businesses.
($1 = 132.7000 yen) (Reporting by Daniel Leussink; Editing by Sam Holmes).
