Environment & Energy

Experts warn the impact of the decline will harm Japan in various ways.

A lowering of the number of people aged between 15 to 64 is predicted to lower potential growth and shrink Japan's GDP.
A decline in the population is said by experts to have damaging consequences for Japan

That in turn is expected to harm the pension system and other elements of social welfare. The impact in rural areas is predicted to be especially damaging, putting the very existence of some communities in danger.

In what ways could this population decline impact Japan?

The impact is already palpable if one goes and visits peripheral regions in Japan. Depopulation is evident in many small towns where only a few elderly residents remain. A declining population of course also means less consumption, which in turn will affect the already slumping economy negatively.

As the aging population has a very long average life expectancy (86.6 for women, 80 for men in 2013), medical costs will inevitably balloon, consuming an increasingly larger part of the budget together with pensions.

Japan’s population began falling in 2011. According to the most recent estimate by the National Institute of Population and Social Security Research (NIPSSR), it will fall to 97 million by 2050 from 127.50 million in 2012, a figure that is based on the 2010 birthrate of 1.39 children per couple. By 2100, the population could fall below 50 million, says Ryuichi Kaneko, a population expert and deputy director of the institute. “But even if we are able to raise the birth rate to 2.07, our population will still continue to fall through 2050 and 2100.”

At the same time that the population is shrinking, it is also aging. Japan’s famed longevity coupled with the low birth rate will leave the country with a much smaller working-age population just as the number of elderly residents peaks. Those over 65 now account for about a quarter of the population. By 2050, the over-65s will account for 38.8% of the population, rising to 41.1% by 2100, according to NIPSSR. “The population problem is one of the most difficult and intractable issues that Japan has to deal with,” says Wharton finance professor Franklin Allen.

Hisakazu Kato, a population economics specialist and professor at the school of political science and economics at Meiji University in Tokyo, forecasts that the workforce will fall to 55.64 million by 2030 and to 41.30 million by 2050 from 65.97 million in 2013, reducing the number of taxpayers able to help support the huge burden for elder care. While some other countries face similar demographic crunches, “no other countries have ever experienced what is happening to Japan,” Kato says.