・Action on the declining birthrate will revive the birthrate, bolstering the growth rate.
・Raise medical and nursing care insurance premium rates and patients’ self-pay rates.
・Encourage nationwide discussions by showing choices for painful reforms.
Following the Lower House election that was held in December 2014, it has been determined that the next consumption tax hike will be put off for eighteen months, and the roadmap for fiscal reconstruction has become increasingly uncertain. Meanwhile, the number of births fell in 2014 to a level that almost dropped below the benchmark of 1 million. The government has set a ]]> ... [Read more]

Since the spring of 2014, a labor shortage in Japan has emerged as a sudden challenge to its economy. Until just before this shortage became apparent, our normal discussions on the economy primarily focused on possible countermeasures that could be taken to address unemployment issues, which were for the most part intended to provide for employment opportunities in response to such questions as “How do we put an end to the rising unemployment rate?” or “How do we improve the employment of young adults?” and “How do we ensure employment for the elderly by the time they start receiving pension?” But after the spring of 2014, Japan was suddenly confronted with a labor shortage, which must have been a huge surprise to the general public at the time. I believe that the package of economic measures called Abenomics, which was launched in November 2012, ... ... [Read more]

In postwar Japan, the spread and expansion of urban areas accelerated due to an explosive population increase. We saw occasional disorderly land development and residential areas grew endlessly. The central and local governments cooperated to develop infrastructure in every corner of the country and to facilitate an equalized distribution of educational, fire-fighting, medical and welfare services across the country. However, we see many vacant houses and spaces everywhere nation-wide today. The deterioration and disuse of water supply pipes, sewage systems, roads and school facilities are on-going. In the future situation in which Japanese society will face financial stringency due to the acceleration of depopulation and population aging, it will be impossible for all local municipal governments across the nation]]> ... [Read more]

The CPI is steadily rising as a result of the BOJ’s new phase of monetary easing. Meanwhile, the unexpectedly low GDP growth rate indicates the low level of the potential growth rate of the Japanese economy. The potential growth rate is probably currently close to zero percent. In order to raise this, productivity needs to be increased. Given that the economy has exited deflation and has attained almost full employment, there is no need for additional demand creation. What needs to be done is to strengthen supply capacity and restore fiscal health, and to set a clear guideline that this needs doing before the CPI reaches 2%. End of deflation The “greatest achievement” of the BOJ’s new phase of monetary easing (quantitative and qualitative easing; QQE) in terms of its effect on the Japanese economy is, undoubtedly, that it pushed up prices. The core ... ... [Read more]

HATTA Tatsuo – President, Asian Growth Research Institute SAITO Shiro – Executive Research Director at the Japan Center for Economic Research Population decline is beginning to cast a dark shadow across Japanese economy. It is considered to reduce the growth rate threatening the sustainability our social security system. But Hatta Tatsuo, President of the Asian Growth Research Institute, who is also chairman of the Government Working Group to Design National Strategic Economic Zones, has a different view. He says there is no need to fear a fall in population. So what is the basis for that? Saito Shiro, executive research director at the Japan Center for Economic Research, asked him. Population growth and development unrelated Saito: We hear it said a lot that one of the greatest problems facing the Japanese economy is the decreasing birthrate and aging population, and population decline. I also ... ... [Read more]

The stockholding of Japanese listed companies by foreign investors reached 30.8% at the end of 2014. This figure surpassed the holding ratio of 26.7% by domestic financial institutions, which used to be at the top in terms of holding ratios. Foreign investors became the largest stockholders in the Japan Corporation for the first time in history, replacing Japanese financial institutions that had had an overwhelming influence on corporate management through lending and stockholding under the main bank system. The governance reform of Japanese companies, long discussed, is entering a new phase along with the growing trend of foreign investors, many of whom are “self-assertive stockholders.” Enhancement of Corporate Governance Emphasized in Japan Revitalization Strategy The Abe administration approved the Japan Revitalization Strategy 2014 at a Cabinet meeting in June 2014. This strategy stresses that “it is essential for global corporations in particular to strengthen ... ... [Read more]

The Japan-China relationship is at its worst ever.” “Bilateral economic ties are no longer warm amid cold political relations.” Expressions like these have characterized Japan-China relations for quite some time now. Against this background, I recently visited China to participate in the Japan-China Think Tank Forum hosted by the Shanghai Institute for International Studies on the topic of “How can we implement a breakthrough to resolve the strained bilateral relations?” Holding a track II meeting like this could be interpreted as an indication that the Chinese government is determined to move the strained bilateral relations forward. The conference was held on May 10th, directly after a series of visits to China paid for by delegations consisting of senior lawmakers of Japan’s Liberal Democratic Party (LDP). At the same time, Prime Minister Abe Shinzo was visiting Europe, and he directly criticized China’s military expansion at ... ... [Read more]

On June 24, 2014, the administration of Abe Shinzo endorsed the “third arrow” growth strategy for Abenomics (the economic policy of the Abe administration) by Cabinet decision. This is a revised version of the growth strategy of one year ago. In addition to incorporating the previously postponed reduction in corporate tax rates, it also gets to grips with regulatory reforms in the so-called “regulatory bedrock” of the agricultural, health and medical fields, which had been thought difficult due to strong resistance by existing groups with vested interests. Markets have reacted favorably, unlike last year when the growth strategy was met with disappointment by investors worldwide and led to a sharp drop in share prices that coincided with the announcement. Immediately after the announcement of the second part of the current growth strategy, even the British magazine The Economist, known for being outspokenly critical, commented ... ... [Read more]

    NONAKA Ikujiro Professor Emeritus at Hitotsubashi University ASAHIOKA Eishun President of the Social Infrastructure Research Center Data unleashing human potential Nonaka Ikujiro: The biggest topic for the Japanese industries this year is the conversion of knowledge into data. For example, behavioral patterns of customers, which were not visible in the past, are made available for analysis and reflected to corporate strategies utilizing so-called “big data” (large volume digital data). Another example is Google’s development of self-driving cars, as well as the acquisition of several robot-related companies at the end of last year; these are also the efforts to convert as much knowledge as possible into the form of data. In this context, it seems the role of knowledge in society is facing a major change.  Asahioka Eishun: As a representative of a private sector think tank, I have been conducting research on ... ... [Read more]

In May 2014, the Committee for Japan’s Future, a task force under the Council on Economic and Fiscal Policy, released an interim report on the discussions that have been held thus far. With the permission of the Cabinet Office, Discuss Japan here presents the main arguments and summary conclusions of the detailed discussions. Introduction If no action is taken against the current situation, an extremely harsh and difficult future will be awaiting us. Nevertheless, if systems, policies and people’s way of thinking are changed rapidly, the future can be changed. The Japanese economy is beginning to get out of a long-standing deflation on the back of Abenomics. We must ensure that the recovering economy will turn into a solid one and result in sustained growth and development. To make sure this happens, it is essential that, while closely monitoring structural changes in our economy ... ... [Read more]