the financial and business services sector. one explanation may be that in periods of uncertainty the large well - known enterprises with good ratings continue to attract funds at favourable conditions and may then channel funds to smaller enterprises via intercompany loans or via trade credits. it would, of course, be useful to compare productivity developments in a wider range of sectors in the euro area with those of the united states. but this is not yet possible, as quarterly productivity developments are not produced at the same sectoral breakdown in the us. ( the us disaggregates only to the non - farm business sector and the manufacturing sector. ) the main comparable indicators used for fiscal policy analysis are the general government deficit, expenditure and debt. harmonised deficit figures show strong deficit deterioration in the euro area and in the us for the last two years. these were driven by sharp declines in tax revenues as well as expansionary fiscal policies. japan 6 displayed a deficit between 6 and 8 % of gdp for most of the early 2000s as a consequence of the japanese crises in the 1990s, with some improvement for the period 2006 – 2008. in 2009, the fiscal outlook deteriorated again with an estimated deficit of around 7 % of gdp. 7 again, a direct comparison is not possible without adjustments, 8 due to methodological differences in their compilation. 9 the expenditure - to - gdp ratio 10 indicates the size of the government sector. comparable figures show a convergence of expenditure levels in the us and japan, at around 37 % of gdp. the relative importance of the government sector in the euro area is much higher, with a current expenditure ratio just above 50 % of gdp. when interpreting these figures, an important caveat concerns the institutional differences between the social security of the countries. mandatory private insurance schemes for pensions, unemployment or health care reduce the headline figures for government expenditure in the us. state contributions to compensate for households ’ voluntary payments into social security funds increase government expenditure in the euro area. comparable figures show an increase in the debt - to - gdp ratio 11 between 2007 and 2009 in the euro area and the us, amounting to 12. 8 percentage points and 19. 2 percentage points respectively. in japan, the government debt ratio stood at 162. 2 % 12 of gdp in 2008 after rising more than 40 percentage points in the last decade. this is due to the accumulation of high deficits and low gdp growth. it is straightforward to compile government data for japan according to the european definition on the basis of

negative correlation, and that the total debt is downwardly sticky has an implication for the relation between the debt and economic growth. in countries such as japan, the united states, the united kingdom, and spain, the debt overhang in households, firms, and / or the government seems to be at a threshold point at which the debt will exert a severe restriction on the economy. therefore, in bis central bankers ’ speeches considering the outlook for the global economy, it must be borne in mind that the high level of total debt could remain a major impediment to global economic development. c. the japanese economy is expected to return to a moderate recovery path the japanese economy has shown some weakness since april 2012 mainly in manufacturing, because the european economy has receded and growth in the chinese economy has slowed, and because domestic demand has been insufficient to offset the weakness in overseas demand. although the trend of exports is still downward, the rate of decline has moderated compared to the situation during the july – september quarter of 2012. this movement is consistent with recent developments in the global purchasing managers ’ index ( pmi ), which reflect the pick - up in the u. s. and the chinese economies. reflecting signs that the fall in exports has bottomed out, production in manufacturing is thought to be bottoming out as well ( chart 19 ). looking at domestic demand components such as private consumption, the negative impact of the ending of environmentally friendly car subsidies has recently diminished, and consumption remains resilient despite several negative factors affecting income such as the decrease in winter bonuses ( charts 20 and 21 ). the employment condition in the manufacturing sector still looks bad, but the negative spiral of weakness in manufacturing is not expected to spill over into the nonmanufacturing sector. in these circumstances, business fixed investment, which has recently shown some weakness on the whole, is projected to turn to a moderate increasing trend ( chart 22 ). according to the production forecast survey by the ministry of economy, trade and industry ( meti ), it is becoming harder to identify the basic trend of production due to quirks in the seasonal adjustment unique to the january – march quarter and the chinese new year holidays in february. nevertheless, at a minimum production is unlikely to show a further substantial decline. as overseas economies are somewhat more likely to return to a moderate growth path – unlike in the period up to summer 2012, when there were high tail risks – and the domestic economy is expected to enjoy the impact