The Global Debt Crisis and the Shift of Japan's Economic Relations with Southeast Asia

Twenty years of slow growth and depression in Japan had a strong impact on relations with Southeast Asia. An explosion of public debt to 235 per cent of GDP has greatly reduced the ability of Japan's government to manoeuvre and has shrunk its overseas development assistance (ODA) contributions to the lowest levels of major donors. While its population was ageing, markets shrinking, and corporations restructuring, Japan became more inward-looking. East Asia, at the same time, was catching up and now represents the world's most dynamic market. Today, Southeast Asia is not only the base for Japan-centred production and supply chains, but the focal point of future-oriented market investment. The article will follow the stage of Japan's "lost" decades, its evolving debt crisis, and show why the country will have to focus on much closer integration with Southeast Asia in the future.