Japan Today

sapporoguy52 comments

Posted in: Japan slips into recession, becoming 4th-largest economy, behind U.S., China and Germany See in context

While Japan's drop to fourth place is "news", no one can claim it's a surprise. While economic growth is propelled by both tangible and intangible factors, two sentences in this article highlight key factors negatively affecting Japan's economy:

"But Japan’s relative weakness also reflects a decline in its population and lagging productivity and competitiveness, economists say."

"At the same time, businesses have been invested heavily in faster growing economies overseas instead of in the aging and shrinking home market."

No "advanced country" has successfully reversed a declining birth rate to achieve population growth, and I'll wager Japan will be unable to do so as well. Japan's options are opening the door to immigration, or implementing measures to boost labor productivity - an indicator on which Japan lags far behind as well. Sadly, I don't think more cute but otherwise useless robots will do the trick.

As a final note, businesses would be more likely to invest in Japan if policies to boost population and per capita productivity resulted in rising consumption spending.

I'm not holding my breath...

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