The Japanese economy is headed for a major trauma given its high government debt, ongoing deflation and aging population, says Russell Jones, Global Head of Fixed Income Strategy at Australia's Westpac Institutional Bank.
"Japan has had an incredibly slow car crash, it's been going on for 20 years. There is a sense that perhaps it`s economic problems may accelerate a bit," Jones told CNBC on Monday.
He adds that because of a rapidly aging population the Japanese economy is not growing and as a result deflation has persisted for over 15 years.
"There's just the possibility that when an economy like that also has a very, very high level of government debt, about 220% of GDP, all the considerations are coming together for some sort of trauma, some sort of crisis," Jones said.
He also warns that Australia, which has strong trading ties with Japan, could feel the heat if Japan`s economic crisis deepens. (moneycontrol.com)
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