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Policies cannot relieve demographic pressure on Japan

Wednesday, April 19, 2023

Significance

Prime Minister Fumio Kishida has made support for children and parents a priority, in an attempt to raise fertility and avert what is widely regarded as a demographic crisis. Japan's population is now 4 million people (3.3%) smaller than its peak population in 2011, and lost half a million in 2022 alone.

Impacts

  • Improving access to childcare and reducing its cost could ease future labour shortages by increasing female labour force participation.
  • Older households are drawing down their assets, which reduces national savings and will generate a permanent current account deficit.
  • An ageing society will require more caregivers, creating demand for foreign workers despite widespread aversion to immigration.

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