Japan's population drop a drag on growth

OFFICIAL DATA from Japan show that the Japanese population declined for the eighth consecutive year in 2018. China Youth Daily comments:

According to Japanese official data, by Oct 1, 2018, the total population in Japan, foreign citizens included, had dropped by another 263,000 and reached the low point of 126 million.

Worse, the percentage of the working population, or those aged between 15 and 64, fell to 59.7 percent of the total population, which is the lowest since 1950. The percentage of those over 70 reached 20.7 percent of the total population, rising above the 20 percent mark for the first time.

Japanese analysts generally believe that the sharp decline in the population is a major cause of the country's economic recession.

First, with a declining population, the domestic market in Japan is withering. This in turn leads enterprises to have lower expectations of the market, thus dampening their enthusiasm to invest. A vicious circle is formed this way.

Second, the decline in the population has resulted in a labor shortage. In order to solve that, the Japanese government has encouraged women, seniors, and foreigners to enter the labor market, but they have lower wages than male workers, further curbing consumption.

Third, the rising percentage of senior citizens in the population is a growing burden on Japan's health and pension systems.

Japanese people who have not yet entered old age lack confidence in the social security system, and planning for pensions in advance is also an important reason for Japan's consumption contraction.

As early as 1989, the birthrate in Japan dropped to 1.57, which sent a warning to society. However, the Japanese government failed to take corresponding measures, and the problem has worsened in the past 30 years.

The Japanese economy has revived a little in the past few years, but its gross domestic product growth rate dropped from 1.9 percent in 2017 to 0.7 percent in 2018 because of global trade conflicts and natural disasters in the country. There is hardly any hope to be seen in that digit.

Japan faces critical challenges from its declining and aging population.