Capital macro: the ratio of Japan's debt to GDP may fall to 190% in the coming years.

According to the funding flow data released by the Bank of Japan on Wednesday, Japan's government debt outstanding at the end of December fell by 3.8% compared to the same period last year. Marcel Thieliant, an economist at Capital Economics, expects that official national accounts data will also show a similar decline, which would mean Japan's debt-to-GDP ratio will decrease from 222% in 2024 to 204% last year. He added that if the budget deficit remains low and the country's economy continues to grow, the debt-to-GDP ratio should decrease to around 190% in the coming years, well below the International Monetary Fund's forecast of 220%.