Japan 2014 births fall to lowest on record

Saturday 03 January 2015 at 2:28 pm.

Japan 2014 births fall to lowest on record

 

Elderly residents rest in the grounds of a temple in Tokyo on September 15, 2014 as the country marks Respect-for-the-Aged-Day. The number of people aged 65 or older in Japan is at a record 32.96 million, accounting for an all-time high of 25.9 percent of the nation's total population, the government announced. AFP PHOTO / Yoshikazu TSUNO©AFP

Deaths outnumbered births in Japan last year by the widest margin on record, underscoring the scale of the challenge facing the government as it tries to ensure a dwindling pool of workers can support growing ranks of pensioners.

The urgency of getting the country’s finances in order was highlighted this week as preliminary figures indicated that Japan’s population fell by a record 268,000 in 2014.

According to the data published by the ministry of health, labour and welfare, births slipped by 2.8 per cent to a low of 1m, while deaths rose fractionally to a high of 1.27m.

Since becoming prime minister a little more than two years ago, Shinzo Abe has forced the central bank to adopt more radical yen-weakening policies to spur inflation while allowing the first rise in consumption tax since 1997.

Such measures are aimed at containing the government’s vast debts, which have swelled to more than twice the size of the economy amid rapidly rising payments for health and social security.

Abenomics has improved Japan’s fiscal situation. A combination of higher corporate profits and the 3 percentage-point consumption tax increase last April seems set to push tax receipts to a 22-year high in the next fiscal year.

This puts the government on course to meet a pledge to halve the gap between what it spends (excluding debt-service costs) and what it collects in tax, as a percentage of gross domestic product.

The finance ministry wants to eliminate that deficit altogether by 2020 — a commitment likely to require big cuts in social security spending, as well as another 2 percentage point increase in consumption tax in April 2017.

 

Shinzo Abe

Japan's Prime Minister Shinzo Abe speaks during press conference in Sao Paulo, Brazil on August 02, 2014. Abe is on a three-day official visit to Brazil. AFP PHOTO / Miguel SCHINCARIOLMiguel Schincariol/AFP/Getty Images

Shinzo Abe became the 90th prime minister of Japan in December 2012.

The core elements of his economic strategy, known as Abenomics, are an aggressive monetary policy, a proactive fiscal policy and an economic growth strategy

Further reading

Yet the broader demographic problems remain. Last weekend, as the government fulfilled an election pledge to present an extra spending package, it outlined plans to arrest population falls outside the major cities, challenging local authorities to boost births via support to women aged 20 to 39, the group most critical to rebuilding the population.

If the current nationwide fertility rate of 1.4 stays unchanged, a task force warned in November, then Japan’s population of 127m would drop by almost a third by 2060 and by two-thirds by 2110.

Even if the fertility rate were to rapidly rise to the replacement level of 2.07 by 2030 and then stay there, the population would keep falling for another 50 years before stabilising at a little less than 100m.

Relaxing the nation’s relatively strict controls on immigration could provide some relief, but Mr Abe has made it clear that he is “flatly opposed to opening the door”, said Masatoshi Kikuchi, a strategist at Mizuho Securities in Tokyo.

Total central government spending in fiscal 2015 will probably rise to a record Y96.9tn ($804bn), according to domestic news reports. But a rise in corporate profits will push tax revenues to Y54tn, the highest since 1993, with new bond issuance dropping below Y40tn for the first time since the Lehman crisis.

The finance ministry declined to comment on the reported figures, ahead of the release of the draft budget around the middle of January.

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