Japan’s Economy Is Heading for Rapid Decline and No Retirement

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NHK, one of Japan’s main media companies, had a segment where Japan is worried about dropping from its ranking as the third place economy (nominal GDP). Japan sees its economy falling behind Germany. Germany has a population of 84 million people while Japan has 122 million. Japan’s per capita income has also cratered a rapidly greying population. Japan has 30% of its population over 65 and will have 35% over 65 by 2040.

In 2021 the number of Japanese people over 75 in need of “final stage” medical care increased by 720,000 to 20 million in total. Japan must find a way to increase birthrates and revive its population.

Japan’s poverty line survey conducted in 2019 determined that a minimum annual income of approximately $10,000 is needed to purchase daily essentials. However, seniors over 65 receive an annual basic pension of roughly $6,000 or $460 each month, which is not enough to cover daily expenses.

The government is working to shift society toward “lifelong work” in an effort to tackle Japan’s severe labor shortage and have the elderly to foot more of their medical and nursing bills. The Fiscal System Council is considering raising the pensionable age to 68.

Japan’s economy will likely fall behind India and Germany by 2030. Japan’s economy could fall behind the UK by 2040 and behind Canada by 2040-2045. Canada’s population is passing 40 million in 2 weeks and could pass 50 million by 2033 and 60 million by 2040.

28 thoughts on “Japan’s Economy Is Heading for Rapid Decline and No Retirement”

  2. Japan is close to being number one in robotics. Robots will be producting everything so things like AV receivers, and cameras should be built in Japan. Cars are likely to be assembled in the US for our market due to shipping costs. If you reduce the need for workers, then their economy should do ok. Most circuit boards can be built in Japan for the same price as Vietnam, just the assembly needs to be low cost.

  3. Everything started going all to hell when the Japanese government bailed out their too big to fail banks. Same thing happened to Great Britain, and the US. I’m beginning to see a pattern here!

    • Japan thrives on its exports. But they haven’t been exporting much other than cars. They used to export lots of stuff. What was the last thing you bought that was made in Japan, other than a car?

      I think the last thing I bought was a digital camera, but that was maybe a decade ago. Hmm. I guess that was further back. The most recent thing seems to be some MDRv6 headphones from 2012. I also bought the same model in 2016, but that one was made in China. Sounds fine. A kitten destroyed the 2012 ones. The 2016 ones are actually my 4th pair. What can I say? They are good headphones. Bought my first pair in high School, I think. Maybe the summer after. That one was stolen. The second one was eaten by a vacuum cleaner.
      Sorry, rambling about nothing. But Japan has made some quality stuff.

  5. There are some economic idiosyncrasies that Japan has, that hurt it. The top one is that they prefer to tear down homes and build new homes rather than properly maintaining homes and using them as long as it makes sense or until someone wants to build a much larger home or apartment complex, before tearing something down. It wastes a lot of building materials, requires more savings and debt. Another is that most of their highways are toll roads, which means there are a lot less tourist dollars being spread around, and less effective market competition. These things are not sufficient to explain their economic woes. Demographics certainly plays a role, but I think it is exaggerated. Competition in exports with South Korea, Hong Kong, Singapore and China are factors as well. And doubling down on the obviously inferior fuel cell tech rather than doing full electric until recently can’t be ignored. Innovation has also been lackluster. They made Walkmans, dats, CD Walkmans, good TVs, pocket TVs, video game consoles, sorta smart watches (calculators, video games), great headphones, nice camcorders in the 1980s, and other advanced electronics, not just cars. And before that they made transistor radios and calculators that were hits. Americans loved that stuff. But the smartphone has subsumed nearly every type of devise…and they don’t make any of the leading brands. They need to embrace creativity, ingenuity, and support more startups, rather than expecting everything to come from the big corporate giants.

    • I would argue the house replacement cycle is beneficial because of improved earthquake safety and energy rules. Accumulating damage from earthquakes, plus revised safety codes, means to get the safety level up in the total house “fleet” you need a higher rate of churn. Adding in the improvements to insulation and upcoming solar roof requirements, and japanese houses suck much less than they used to. It was only until very recently that single pane windows were still default, but now you are seeing double and triple pane windows, and ad campaigns for window retrofits.

      Unfortunately they still don’t have a sane HEMS standard to tie in local energy generation and storage (thermal and electrical), when they have so many component parts just begging for integration. Fuel cells linked to hot water tankage, solar PV, solar thermal hot water, floor heating/cooling with commensurate thermal oil storage, etc. They’re even offering fuel cells for apartments now, but no unifying push for thermal/electrical integration/storage between electricity, hot water, and HVAC.

    • Low birth rates correct themselves eventually.
      Accepting waves of immigrants is a quick fix that will be later problems.
      Low birth rates for now but at least they don’t have to tolerate their cities becoming ghettos like in Europe

      • Where’s the evidence that low birth rates correct themselves?
        Where’s the evidence that immigration will definitely cause later problems?
        Granted, there’s some growing pains with immigration, and you can get the odd bad actor, though most bad actors are home-grown; but the vast majority of immigrants are hard-working, responsible individuals who just need a place to give them a chance.
        Finally, ghettos in Europe? First, Europe is not a country. Second, most countries in Europe enjoy a very high standard of living.
        These are just bad and factually incorrect right-wing talking points.

        • I challenge you to visit us here in Sweden.
          Make a visit to some of the 300+ no-go zones with a camcorder and see if you make it out alive.

          • I live in sweden (Ostergotland County). I lived in Italy, Switzerland, United States and now Sweden. I have never seen better integration than in Sweden. In Sweden many immigrants are fully integrated and speak Swedish (everyone has access to language courses for immigrants). Many are not segregated to the lowest paying jobs, many are teachers, doctors (although doctors in Europe are not wealthy as in US). In sweden the majority of the criminality is linked to the biker gangs (it might sound laughable, but they are actually very powerful criminal organizations that managed the traffic of drugs/prostitution and weapons) and most of the biker gangs are linked to far right white nationalists. There are also problems with radicalized immigrants , but that is in general when you have for example danish morons that come in sweden to burn the Quran causing an uprising (that is obviously unacceptable).

            • For information (in English) about Sweden you can read (at least the homepage) of TheLocal(dot)see. I really do not understand why there is so much bull__t about Sweden, especially in US media

              • Who is spreading the bull_t? Might it be you, AAA?

                The Echrochat sting revealed that the drug sales in Sweden were 10 times larger than assumed, so I am not sure I trust the estimates that peg biker gangs as the largest group of criminals. And you will get confronted if you are filming in the “no-go-zones”, something that the biker gangs do not care about. Point a camera anywhere and a young hostile man will put his hand over your phone or camera lens….

                Furthermore, the rate of shooting is several times higher per capita in Sweden compared to the neighboring countries. Many low paying jobs are dominated by immigrants, something that breeds resentment over time. Just check who are the cleaners, who are the people working in elderly care a.s.o. Please do not use anecdotal evidence about a doctor here and there; it’s a known fact that the rate of education for children of immigrants is lower than for swedes with two swedish parents. Unfortunately.

                You can argue that it is all worth it, but you cannot say that unskilled immigration – Sweden does not select immigrant on the basis of education – is not without costs. That’s just plain dishonesty.

        • Japan can try immigrating Japanese from their diaspora. Then they can try immigrating Asian farmers to repopulate their countryside. Then go after well-educated Japanophiles.

      • Here in Australia we’ve been receiving immigrants since the Europeans arrived. Early on there were some problems but it is now accepted as a fine solution to declining birth rates. Japan has to be less culturally snobby and adapt with times. Learn that new and different are not necessarily bad but rather actually likely good. Europe is doing fine!

    • They can’t stomach migration because they have a strong sense of themselves as a people.

      They want to keep the Japanese people together as a people, and allowing immigration of different cultures / races is a sure way to destroy that cohesion.

      The Japanese don’t need your sympathy; they are willing to suffer now so that the Japanese people endures.

      • Here in Australia we’ve been receiving immigrants since the Europeans arrived. Not good for the First Nations peoples of course but after that immigration has always been accepted as part of our growing process. It is now accepted as a fine solution to declining birth rates. Japan has to be less culturally snobby and adapt with times. Learn that new and different are not necessarily bad but rather actually surprisingly good. Europe is doing fine!

        • Why was the immigration not good for the First Nations people? Hasn’t the per capita GDP skyrocketed since all those new people arrived? Hasn’t the economy boomed? Didn’t the retirement age drop significantly? Aren’t there wonderful new restaurants for them to enjoy?

          Or maybe the First Nations people were fine with their own people and their own culture just as the Japanese are instead of importing their own cultural death.

  7. “the most sanctioned country in the history of the planet ”

    I don’t see North Korea anywhere on that list.

    OK, seriously: Russia is an energy exporter, and Europe is actively making themselves more dependent on energy imports, except for France. I assume the IMF is figuring that the Ukraine war ends soon, and then Russia is selling huge amounts of gas to Europe.

    Otherwise those number make no sense at all.

  8. Part of the post is missing.

    This has been a concern of the Japanese for a very long while. Look at Roujin Z-0001; An anime about a robotic hospital bed for geriatric patients, necessitated by a shortage of nurses.

    More than 3 decades ago they saw a future where they were overloaded with geriatric patients to the point where they’d have to automate their care.

    I believe the Japanese heavy expenditure on humanoid robots is motivated by their expectation of a huge labor shortage. Not just a shortage of industrial labor, but geriatric care, retail, every field.

    You can also see them doing a lot of research on somatic cloning.

    If you can connect the dots, while they don’t publicly say it, they may be looking at repopulating using cloning and humanoid robot nannies. Not the sort of thing they could openly advocate at this point, but they’ve been working hard on the necessary components.

    From the Japanese perspective, they’d save themselves while remaining Japanese, unlike all the Western countries that have bet on extremely high levels of immigration from third world countries.

    • If the situation gets really bad and the technology abides, nations will be producing babies using ectogenesis as soon as they can (intersecting the cloning interest).

      With their care being state driven (yeah, no way for that to go wrong) or given to volunteers in exchange of some benefit. Either a stipend/salary/tax cuts. Or people could simply be forced to raise their replacement, maybe their clones if there is no other option. Right, coerced parenthood.

      Sounds very Brave New World? yeah, but the world has proven to surpass fiction relatively often, and population being destiny is one of those things you can’t negotiate with.

    • But they are not saving themselves where as Western countries are thriving. How long will it take to learn this lesson?

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