Country risk

Country risk in Japan is low, suggesting a low likelihood that it will be unable and/or unwilling to meet its external debt obligations. However, individual debtor entities can and do default. Japan’s high government debt ratio, at more than 220% of GDP in 2020, remains the key country risk.

Japan is ranked 29th out of a possible 190 on the World Bank’s ease of doing business scorecard, improving 10 places in the latest survey. Paying taxes, protecting minority investors, getting credit and starting a business and trading across borders are relatively easier in Japan compared to other advanced economies.

The risk of expropriation in Japan is low, in line with low political risk. New prime minister Yoshihide Suga has strong support in public opinion polls, providing him scope to maintain Abe’s pro-growth policies. Japan scores in the top quartile in all areas of governance but underperforms on measures of voice and accountability.