On July 9, the government presented its fiscal projections for medium- to long-term analysis at this year's 11th meeting of the Council on Economic and Fiscal Policy. In the analysis, they prepared two scenarios based on future total factor productivity, labor force projections and world economic trends. One is a baseline case, and the other is a high economic growth case. In the former, net annual growth of Japan's gross domestic product is estimated at slightly more than 1.0 percent at the beginning of 2020s, while in the latter, GDP growth of 2.0 percent is projected.

The most shocking part of this report is that even in the more optimistic scenario, it is clear that the government can never realize its fiscal target of achieving a primary balance surplus by fiscal 2025 — even though the target year has just been pushed back by five years from fiscal 2020.

Japan is notorious for its huge fiscal deficit. The gross debt obligation of the national and local governments is almost 200 percent of the gross national product — the worst among developed countries, including Italy, whose corresponding figure is around 130 percent. It was said that when Greece went bankrupt in 2010, its debt-to-GDP ratio was around 130 percent and even at its worst the figure was still around 170 to 180 percent. It's easy to understand how serious the Japanese fiscal situation is.